Is it fair and equitable? (How are you defining fair and equitable?)
Review Mankiw page 162, Figure 6 on deadweight loss and the case study on “The Laffer Curve and Supply-Side Economics”.
A common misunderstanding is that the name “supply-side” economics comes from policies of favorable tax reductions for employers. While tax cuts of this type did happen during the Regan era, as the case study indicates the name “supply-side” was meant to indicate the output of those tax cuts, in other words, people supplying a higher quantity of labor to the market, thus decreasing unemployment and increasing the total aggregate amount of tax contributed. Hence why the Laffer curve is shaped the way it is, to represent that at some point an ideal rate for tax exists that will maximize the tax revenue collected. (For those of you who remember Calculus II and taking second derivatives of tax equations to identify the inflection point of a curve, this is what we were doing)
So your challenge for this week:
Do some reading, some research, and some thinking. As future DBA’s and experts in business administration, I would like you to join the dialogue on whether or not an ideal tax rate exists or can be discovered here in the United States.
1. Why or why not?
2. What is your suggestion for this rate?
3. Is it “fair and equitable”? (How are you defining fair and equitable?)
500 words please, and please cite references that informed your thinking.
Answer preview to is it fair and equitable? (How are you defining fair and equitable?)
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