Forbes’s version of “one big idea” is a flat tax and a sound dollar linked to gold. If we have that, we’ll be the “land of opportunity again.”
Laffer agreed. “Our economic verities have remained forever,” he said. “They go back to caveman, pre-cavemen. Incentives matter: If you reward an activity, then people do more of it. If you punish an activity, people do less of it.”
.. But for the tax side of “one big idea,” Laffer would like to see corporate tax reform.
.. Forbes, who can see income-tax reform following corporate-tax reform. “Even if we get to this two years down the road,” he said, “I think [Trump would] be amenable to doing something radical like a flat tax.”
.. “Let me put it just succinctly,” answered Laffer. “These people are willing to rebut arguments they know to be true in order to curry favors with their political benefactors.”
.. Forbes added: “A lot of these far-left ideologues would rather have a smaller economy and more government power than a bigger economy and a smaller government.”
.. Where, I asked, does trade protectionism — including tariffs on China — fit into the low-tax-rate, strong-dollar prosperity model?
.. Forbes, who offered an alternative: “The smart approach is get this economy moving through. . . tax cuts and deregulation. And then having a stable dollar . . . you sit down country by country and remove trade barriers.” Anything but the trade protectionism that blew up the stock market in 1929.
.. To which Laffer added the great line: “Don’t just stand there, undo something!” “Cut taxes, stabilize the dollar, reduce tariffs, reduce regulation,” he said. “Undo, undo, undo — and undo the damages these other guys have done.”