Tax Hikes and the 2011 Economic Collapse

Arthur Laffer's column in the Wall Street Journal today explains his theory that economic activity has been pulled into 2010 from 2011 to avoid the tax hikes set to occur 1/1/2011. As a result, economic activity will decrease next year, leading to a double dip recession. The stock market's recent correction may be discounting this double dip.



Anonymous said...

I have serious doubts about the Laffler "theory". It's difficult to see the future in 20-20 perspective, but here's my theory that I doubt no one will dispute. When it comes to making money in the stock market, "Buy low and sell high". It's never failed me yet! Consider that most people don't really think about the financial aspects of spending money. It's usually emotional. In fact, most people spend money that they don't even have. So why should they concern themselves with taxes? The fact is most people don't. And currently, most people are still very concerned about keeping their "stream of income" coming and holding on to some of it for the proverbial "rainy day". If unemployment begins to fall and the economy gets back on track over the next 6 months, I predict that 2011 will be an excellent year. And you can quote me on that.

viachicago said...

Anonymous, the people who make hiring and investment decisions do concern themselves with taxes (and regulation). Taxes and regulation are certainly not the only considerations, but when combined with the other headwinds facing the economy, I think they will prevent both unemployment from falling and the economy from improving in the next 18 months.