In a speech on Wednesday, US President Donald Trump outlined the principles of a tax plan that would amount to the most sweeping changes to the US tax code in decades.
The plan would cut taxes for the rich and businesses, although Trump insisted that his tax plan would primarily help the working class, who would reap the benefits from the resulting economic growth.
This idea – that tax cuts for the wealthy fuel growth – was popularised by conservative economist Arthur Laffer. The “Laffer curve” goes so far as to suggest that tax cuts can actually increase a government’s revenues. Laffer’s curve and his advocacy of tax cuts have been the driving philosophy of Republican tax policy for decades.
But a 2012 survey of 40 top economists found that most of the profession disagrees with Laffer – and historically tax cuts and hikes haven’t closely correlated with economic expansion and recession.
Laffer has advised President Trump on his tax policies and said his plan would be “phenomenal” for the United States and the world.
For this week’s Headliner, we speak with Laffer about whether Trump’s plan will make the US economy grow, or simply widen the gap between the rich and the poor.
Source: Al Jazeera News