The tax rate increases reduce economic growth; they shrink the pie; they cause more poverty, more despair, more unemployment, which are all things government is trying to alleviate with spending.
Arthur LafferIf you look at the performance of the zero-income-tax-rate states and the highest-income-tax-rate states, I believe a large amount of their difference is due to taxes. Not only is it true of the last decade, but I took these numbers back 50 years. And, there's not one year in the last 50 where the zero-income-tax-rate states have not outperformed the highest-income-tax-rate states.
Arthur LafferThe zero-income-tax-rate states have far faster growth in tax revenues than did the states with highest income tax rate over this period.
Arthur LafferThere are lots of other things that affect state growth besides state taxes. However, the reason I look at taxes is because these are policy variables that can be changed by state governments in order to get better results than they otherwise had.
Arthur LafferWith the shrinking of the US economy, and it's shrinking very rapidly, you not only have more money, but you also have fewer goods. That's a classic double-whammy on inflation.
Arthur LafferLet me just try to give you sort of the intuitive one here on the stimulus funds. If you have a two-person economy - let's imagine we have two farms, and that's the whole world, just two farms. If one of those farmers gets unemployment benefits, who do you think pays for him? Am I going way over your heads today?
Arthur Laffer