Dollars to Donuts on Dynamic Scoring
August 22, 2013
Dan Mitchell over at Cato has a great blog post on "The Common-Sense Case for Dynamic Scoring." He explains his struggles over the years in getting people to understand the relationship between tax rates and the larger economy, specifically the insight of the Laffer Curve:
Over the years, I’ve picked up a few teaching examples that seem to be effective. People are always shocked, for example, when I show them the IRS numbers on how rich people paid a lot more tax when Reagan cut the top tax rate from 70 percent to 28 percent.
And they’re also more likely to understand why class-warfare tax policy won’t work when I show them the IRS data on how upper-income taxpayers have considerable control over the timing, level, and composition of their income.
Perhaps my favorite teaching technique, though, is to ask folks to pretend that they’re running a restaurant and to think about what might happen to their sales if they double the price of hamburgers. Would it make sense to assume that they would get twice as much revenue?
This leads Dan to a very nice mention of our new video on dynamic scoring, only in our case it's doughnuts rather than hamburgers in the example.