The Truth About Tax Cuts and the Economy


When my father Bob Bauman was a congressman, one of his colleagues from the state of New York, Jack Kemp, was a big proponent of tax cuts. He believed in something called the Laffer Curve, which purported to show that reductions in tax rates led to an increase in economic activity, which in turn led to more tax revenue.

If you ask my father now — or most of his Republican colleagues from the 1970s and 1980s — whether or not they believe that the Laffer Curve represents reality, they will tell you they don’t.

Even Jack Kemp, who died in 2009, accepted that reducing taxes under Ronald Reagan did not increase revenue in the way that the Laffer Curve claimed.

In this week’s Bauman Letter Weekly, I quote from some of the letters I received from you after last week’s podcast, as well as my monthly podcast on the subject of the Trump administration’s tax proposals. Some very interesting and insightful issues were raised — but the question of whether cutting taxes leads to growth and therefore increased government revenue also raised its head.

Listen to what your fellow readers think, as well as my comments, and I’ll be happy to keep the discussion going with any other comments that come in.

Click here to listen.

Click here for the transcript.

Kind regards,

Ted Bauman
Editor, The Bauman Letter