Show u r 1 J i THE VOICE OP BUSINESS J Tax reforms 1 ti t How less ess can be more i i By fly Richard L. L Lesher President Cha Chamber of Commerce of the United States Theres There's a new buzzword in economics today Its It's called the Laffer curve Arthur Laffer Gaffer is an economist who pointed out what should be obvious In any economic system there are always two rates of taxation which yield the same revenue For example if the tax rate is zero the government gets no revenue And if the tax rate is percent the government government government govern govern- ment gets no revenue because all ail economic activity will take place as barter Carry that concept a little further At Ata a tax rate of say 20 percent the government might be able to get the same amount of revenue that it would at a tax rate of 80 percent Why Because the lower tax rate would stimulate productive economic ac ac- ac And 20 percent of a bigger pie can be as large as 80 percent of a smaller pie The significance of the Laffer curve js is this It tells us that there comes a aI I point where the government can ace ac ac- ac- ac e increase its revenue by cutting taxes Many reputable economists believe we are now at that point That is if we cut taxes-especially taxes taxes on capital the formation-the economy will boom and the government will actually come out ahead along with everyone else There are several goo good places to make the cuts Representative William of Wisconsin has focused on one of them He wants to put the capital gains tax rate back where it was in 1969 at a maximum of 25 percent Under the current law capital gains taxes can approach 50 percent for individuals and 30 percent for corporations This proposal known as the Amendment has attracted strong support in Congress In fact it has 60 sponsors in the Senate One well-known well economic study group group Chase Chase Econometric Associates- Associates estimates that passage of the Amendment would raise the annual growth rate of the Gross Cross National Product from a level of 34 percent to a level of 36 percent and create new jobs Federal revenue would increase increase increase in in- crease by 45 billion and the budget deficit would be cut by 16 billions All of these figures are estimates of the effect that would be created on economic activity between now and 1985 1965 if the amendment were adopted According to the Chase economists the reduction in capital gains taxes will raise stock market prices which in turn will stimulate capital spending and economic growth The increase in economic activity will increase federal government revenues All of this economic jargon is just a complicated way of saying this If U you lea leave ve more profit in the hands of those who have earned it they will use it productively Unfortunately at this time the Carter Administration is opposed to this beneficial tax cut Not on economic grounds but on the same tired old theological grounds If U you cut the maximum tax rate then somebody is going to make more th that t evidently is to be considered evil no matter how much good it does |