April 15th is almost here and for about 50% of us, we have just about finished working the necessary hours to pay the tax bill. Yes, that’s right, the 50% of working America that pays taxes is just starting to earn money for themselves. There is a theory about the tax rate, that I believe we need to institute, namely the Laffer Curve. The Laffer Curve is a theoretical representation of the relationship between government revenue raised by taxation and all possible rates of taxation. What does that mean to you? It means that as the tax rate increases – government revenue begins to go down. The Laffer Curve theorizes that there is a happy median, so to speak, a rate at which both government tax revenues go up and the tax paying citizens work output goes up, this of course, makes both party’s very happy. But, if at any time, say the government raises the tax rate to 70%, the incentive to be productive goes way down. Afterall, why work if you are not going to receive any of the fruits of your labor.
Art Laffer, the person the curve was named after, suggests that there is a perfect tax rate for both the individual to pay to the government and any businesses, that would maximize both revenue and production. What is the ideal rate you must be asking? ELEVEN PERCENT, yes that’s right, I said 11%! So why during a recession, almost a depression, to hear our competent leadership explain are we paying 30% and up and are getting ready to raise that rate even more? Dare I say it, but could it be the redistribution of wealth?
So, on Thursday, Tax Day, please feel free to enjoy writing that check to the government. Yes, the check that you just spent 104 days working for and remember “it just feels good to share the wealth”. Right?
by Kim Lentz