Tag Archives: arthur

Economist Laffer and Tea Party Rose Togeher

The Tennessean has run a profile piece on Arthur Laffer, the Nashville-based economist who has achieved new fame by pushing tax cuts at the state level, He worked with legislators, for example, to push repeal of Tennessee’s inheritance and gift taxes this year.
An excerpt:
Laffer’s return as the tax-cutting politicians’ favorite economist closely corresponds to the tea party revolution that swept a wave of stridently fiscal conservative Republicans to power in statehouses nationwide in 2010.
Days after being elected, Florida Gov. Rick Scott named Laffer to a team of six economists who would help him devise his first budget. Kansas Gov. Sam Brownback similarly hired Laffer to advise him as he worked to reduce that state’s income tax, a plan that Brownback signed into law last week.
Laffer also contributed papers and research for think tanks in Missouri, Oklahoma and Tennessee. Those papers have echoed his annual “Rich States, Poor States” report, which features the ALEC/Laffer State Economic Competitiveness Index.
The index ranks states based on 15 policy variables. States with low taxes and business costs, small public sectors, little debt and laws that make it harder for workers to unionize rank the highest.
Oklahoma Gov. Mary Fallon, a Republican, wrote the foreword to the latest edition. Brownback calls the report “required reading for governors.”
But Carl Davis, a senior analyst at the Washington, D.C.-based Institute on Taxation and Economic Policy, says Laffer’s research is hokum.
“People just like the idea of tax cuts,” Davis said. “A lot of it is his saying things that people want to hear.”

FedEx CEO Was ‘Misunderstood’ About Leaving Tennessee for Tax Reason

FedEx President, Chairman and CEO Fred Smith said today that economist Arthur Laffer must have misunderstood him last week in Memphis because Smith said he’s “never taken a position” on Tennessee’s estate tax and has no plans to leave Tennessee.
From the Rick Locker report:
Smith, founder of FedEx, responded today to public remarks made Monday by Laffer to a state legislative committee during Laffer’s testimony in support of legislation to phase out Tennessee’s inheritance and estate tax by 2016. Laffer is a leader in the lobbying effort to pass the bill and made a 25-minute talk to the House-Senate Fiscal Review Committee Monday in support of the bill.
Laffer gained fame as a supply-side advocate in the administration of former President Ronald Reagan and moved a few years ago from California to Nashville, where he is chairman of Laffer Associates, a consulting firm. He dropped several names during his presentation Monday, including Reagan and California anti-tax activist Howard Jarvis.
At one point, in response to a question about the economic impact on the state of repealing the inheritance tax, Laffer said: “I spent about two hours with Fred Smith three days ago up in Memphis, and he said he’s gettin’ out of this state if it doesn’t happen. And now we don’t want to lose FedEx. Fred Smith’s a couple of classes behind me at Yale and he’s a good friend.”
FedEx on Monday night said the company doesn’t comment on Smith’s personal matters. But Smith issued a statement today saying Laffer must have misunderstood him.

Laffler Tells Legislators: Repeal Gift Tax for ‘Creme de la Creme’

Economist Arthur Laffer urged Tennessee lawmakers on Monday to follow up repeal of the state inheritance tax — a bill that has already assured of passage — with a cut to the state’s tax on gifts, which he said curbs economic growth.
From Chas Sisk’s report:
Laffer told the legislature’s Joint Fiscal Review Committee that the state’s gift tax should be eliminated immediately. The Nashville-based economist has been pushing for repeal of Tennessee’s estate and gift taxes, which he says cause rich retirees to move to states where they can pass on their wealth to heirs tax-free.
“Tennessee’s performance has been very poor, and the reason it’s been poor in my view … is because of the gift and estate tax,” he said. “You’re taking that very small group of people, the crème de la crème of the job creators, and forcing them to leave. By doing that, you’ve really held down the growth rate.”
….Laffer told lawmakers Monday that they should continue with repeal of Tennessee’s gift tax, which kicks in whenever a Tennessee resident gives a family member goods and cash worth more than $13,000 in a year or a nonrelative more than $3,000. The tax starts at 5.5 percent, tops out at 16 percent, and brings in about $15 million a year.
House Finance Committee Chairman Charles Sargent, who has filed legislation to repeal the gift tax, indicated he would like to pursue the idea. Speaking as if a gift-tax repeal were a foregone conclusion, Sargent, R-Franklin, asked Laffer when the state would see the benefit.