Corporate Income Tax Elasticity: How Republicans Can Have Lower Tax Rates and Democrats Can Collect More Tax Revenue!
by Arthur B. Laffer, John A. Martilla, W. Grant Watkinson
Pacific Research Institute
December 19, 2012
With the net national debt climbing to more than 70 percent of the nation’s GDP, the deficit at unsustainable levels, unemployment and underemployment remaining stubbornly high, and economic indices faltering, Americans have been bombarded with pleas on the one hand for the nation’s businesses and wealthy to pay their fair share (i.e., higher taxes) and on the other for no new taxes. But what if in one bold move, the Republicans could have lower tax rates and the Democrats could have greater tax revenues? Historical evidence and macroeconomic modeling suggest that in the case of corporate income taxes this may not just be possible, but even likely.