IDEAS home Printed from https://ideas.repec.org/a/bla/coecpo/v7y1989i4p116-128.html
   My bibliography  Save this article

Are We All Supply‐Siders Now?

Author

Listed:
  • DAVID R. HENDERSON

Abstract

The term “supply‐sider” has come to mean someone who believes that an x percent cut in tax rates walkthrough its effect on the incentive to work, to save and invest, and to avoid and evade taxes–lead to much less than an x percent cut, and perhaps even to an increase, in tax revenues. Not all economists are supply‐siders in this sense, but many more are now than were during the 1970s. The reason for the switch is the evidence that has accumulated on the incentive effects of taxes. Many studies have shown that cuts in tax rates for the highest‐income taxpayers actually have increased the government's revenue. A key reason for this effect is not a large elasticity of labor supply but rather a large elasticity of tax avoidance with respect to tax rates. The most important policy implication of this evidence is that the government cannot increase its revenue substantially without taxing the non‐rich.

Suggested Citation

  • David R. Henderson, 1989. "Are We All Supply‐Siders Now?," Contemporary Economic Policy, Western Economic Association International, vol. 7(4), pages 116-128, October.
    • Handle: RePEc:bla:coecpo:v:7:y:1989:i:4:p:116-128
    DOI: 10.1111/j.1465-7287.1989.tb00578.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.1465-7287.1989.tb00578.x
    Download Restriction: no
    File URL: https://libkey.io/10.1111/j.1465-7287.1989.tb00578.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Fullerton, Don, 1982. "On the possibility of an inverse relationship between tax rates and government revenues," Journal of Public Economics, Elsevier, vol. 19(1), pages 3-22, October.
    2. Grieson, Ronald E., 1980. "Theoretical analysis and empirical measurements of the effects of the Philadelphia income tax," Journal of Urban Economics, Elsevier, vol. 8(1), pages 123-137, July.
    3. Feldstein, Martin, 1986. "Supply Side Economics: Old Truths and New Claims," American Economic Review, American Economic Association, vol. 76(2), pages 26-30, May.
    4. Arthur B. Laffer, 1981. "Government Exactions and Revenue Deficiencies," Cato Journal, Cato Journal, Cato Institute, vol. 1(1), pages 1-21, Spring.
    5. J. A. Mirrlees, 1971. "An Exploration in the Theory of Optimum Income Taxation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 38(2), pages 175-208.
    6. Stuart, Charles E, 1981. "Swedish Tax Rates, Labor Supply, and Tax Revenues," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 1020-1038, October.
    7. repec:bla:scandj:v:85:y:1983:i:4:p:499-519 is not listed on IDEAS
    8. Feige, Edgar L. & McGee, Robert T., 1983. "Sweden’s Laffer Curve: Taxation and the Unobserved Economy," Working Paper Series 95, Research Institute of Industrial Economics.
    9. Mankiw, N Gregory & Summers, Lawrence H, 1986. "Money Demand and the Effects of Fiscal Policies," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 18(4), pages 415-429, November.
    10. David Henderson, 1981. "Limitations of the Laffer Curve as a Justification for Tax Cuts," Cato Journal, Cato Journal, Cato Institute, vol. 1(1), pages 45-52, Spring.
    11. Richard Hemming & John Kay, 1980. "The Laffer curve," Fiscal Studies, Institute for Fiscal Studies, vol. 1(2), pages 83-90, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Pavlina R. Tcherneva, 2013. "Reorienting Fiscal Policy: A Critical Assessment of Fiscal Fine-Tuning," Economics Working Paper Archive wp_772, Levy Economics Institute.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Bruno Théret & Didier Uri, 1988. "La courbe de Laffer dix ans après : un essai de bilan critique," Revue Économique, Programme National Persée, vol. 39(4), pages 753-808.
    2. Şen, Hüseyin & Bulut-Çevik, Zeynep Burcu & Kaya, Ayşe, 2017. "The Khaldun-Laffer Curve Revisited: A Personal Income Tax-Based Analysis for Turkey," MPRA Paper 78850, University Library of Munich, Germany, revised 27 Apr 2017.
    3. Hsing, Yu, 1996. "Estimating the laffer curve and policy implications," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 25(3), pages 395-401.
    4. Andrew Leigh, 2007. "Taxpaying Made Easy," Agenda - A Journal of Policy Analysis and Reform, Australian National University, College of Business and Economics, School of Economics, vol. 14(1), pages 81-86.
    5. Komlos John, 2019. "Reaganomics: A Watershed Moment on the Road to Trumpism," The Economists' Voice, De Gruyter, vol. 16(1), pages 1-21, December.
    6. Lawrence B. Lindsey, 1985. "Taxpayer Behavior and the Distribution of the 1982 Tax Cut," NBER Working Papers 1760, National Bureau of Economic Research, Inc.
    7. Serguei Kaniovski & Margit Schratzenstaller-Altzinger, 2004. "Selbstfinanzierung der Steuerreform 2004/05," WIFO Studies, WIFO, number 25033, April.
    8. Pecorino, Paul, 1995. "Tax rates and tax revenues in a model of growth through human capital accumulation," Journal of Monetary Economics, Elsevier, vol. 36(3), pages 527-539, December.
    9. Zouhair Aït Benhamou, 2018. "A Steeper slope: the Laffer Tax Curve in Developing and Emerging Economies," Working Papers hal-04141686, HAL.
    10. Eugenio J. Miravete & Katja Seim & Jeff Thurk, 2018. "Market Power and the Laffer Curve," Econometrica, Econometric Society, vol. 86(5), pages 1651-1687, September.
    11. Cho, Myeonghwan, 2014. "The effect of capital gains taxation on small business transfers and start-ups," Economic Modelling, Elsevier, vol. 36(C), pages 447-454.
    12. John Komlos, 2019. "Reaganomics: una línea divisoria," Tiempo y Economía, Universidad de Bogotá Jorge Tadeo Lozano, vol. 6(1), pages 47-76, February.
    13. Gradus, R.H.J.M., 1989. "Optimal dynamic taxation, saving and investment," Research Memorandum FEW 400, Tilburg University, School of Economics and Management.
    14. Stanisław Cichocki & Ryszard Kokoszczyński, 2016. "The evolution of the Laffer curve as a framework for studying tax evasion: from simple theoretical to DSGE models," Ekonomia journal, Faculty of Economic Sciences, University of Warsaw, vol. 45.
    15. Zouhair Ait Benhamou, 2018. "A Steeper slope: the Laffer Tax Curve in Developing and Emerging Economies," Post-Print hal-02977714, HAL.
    16. Kostantinos J. Liapis & Evangelos D. Politis & Dimitra Ntertsou & Eleftherios I. Thalassinos, 2020. "Investigating the Relationship between Tax Revenues and Tax Ratios: An Empirical Research for Selected OECD Countries," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(1), pages 215-229.
    17. ColemanII, Wilbur John, 2000. "Welfare and optimum dynamic taxation of consumption and income," Journal of Public Economics, Elsevier, vol. 76(1), pages 1-39, April.
    18. Roger Waud, 1985. "Politics, deficits, and the Laffer curve," Public Choice, Springer, vol. 47(3), pages 509-517, January.
    19. Juan Pablo Herrera Saavedra & Juan Camilo Villar Otálora & Jacobo Campo Robledo, 2020. "Tributación en Colombia: Una aproximación teórica y empírica de la Curva de Laffer," Estudios Económicos SIC 18601, Superintendencia de Industria y Comercio.
    20. Jacob Lundberg, 2017. "The Laffer curve for high incomes," LIS Working papers 711, LIS Cross-National Data Center in Luxembourg.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:coecpo:v:7:y:1989:i:4:p:116-128. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/weaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.