10 comments to “The Laffer Curve — What Is It Exactly?”

Robert Coté on February 3rd, 2008 at 9:27 am said:

• They write about every real estate subject you might imagine.

  They write about some perspectives of every real estate subject you might imagine.

  May they never change. Still some bigger picture balance is necessary. In some circles Bloodhound isone of the most respected real estate blogs in the country. In others it is the most reviled. It is going to take more than the few years that have elapsed since the vile insults thrown out at people in mid 2006 who had the gall to suggest there was an imminent danger of a housing bubble collapse.

  Read it for what it is but don’t forget what it is. Steve Martian’s “Plumbing Joke” is legend precisely because it skewers insider insularity.

Robert Coté on February 3rd, 2008 at 9:28 am said:

• Comment posting ate my italics and quotes. Sorry.

The Mortgage Cicerone on February 3rd, 2008 at 11:29 am said:

• Jeff - A great post and something I pray Americans take the time to understand how the Laffer Curve works and ignored by too many politicians looking to make vote-getting minute sound bites!

BawldGuy on February 3rd, 2008 at 11:39 am said:

• Tony — As you and I know, the Laffer Curve is apolitical. It works no matter who makes use of it. What is scary to me, is when the first liberal sees its potential for creating more money to spend.

  Thanks

Robert Coté on February 3rd, 2008 at 2:37 pm said:

• The beauty of the Laffer Curve is that it nearly always shows that beneficial transactions are overtaxed even if the sole goal is to raise revenue.

  The greater generalization has an interesting impact on choosing investment properties. Urban densities have a similar “U” shaped optimal density where costs such as taxes and utilities and less clearly insurance and similar costs. To keep costs low it is better to choose neither low density rural or high density central urban.

BawldGuy on February 3rd, 2008 at 2:44 pm said:

• I wouldn’t grant that thinking axiom status, but it probably turns out to be true many more times than not.

Robert Coté on February 4th, 2008 at 7:53 am said:

• A real estate investor who relies on axioms for results usually ends up only getting the ax part.

BawldGuy on February 4th, 2008 at 10:06 am said:

• That sentence conveys absolutely nothing but a cute thought.

  It also carries with it zero value.

  Axioms are accepted as true because that’s been their history.

  For instance, when lenders stop lending they’re not lenders. Therefore, if relying on the axiom ‘lenders lend’ is dangerous, we’re all in trouble.

  The saying is cute though, I’ll give you that.

Robert Coté on February 4th, 2008 at 10:18 am said:

• Guilty, I was just being cute while agreeing with you. But seriously think about applying the Laffer Curve as I suggest. Include things like Mello-Roos and HOAs. It gets hard to justify places with high taxes very low taxes even when the former can usually command higher rents and the latter enjoy lower carrying costs. There is IMO a sweet spot.

BawldGuy on February 4th, 2008 at 10:24 am said:

• Watch the video — it pinpoints the sweet spot.

  That very spot is why Laffer picked 28% as the top marginal rate in Reagan’s tax cut.

  I cannot wait for parts II and III. It should be delicious.

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