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California Democrats use the ‘Laffer Curve’ to justify a cannabis tax cut - YouTube
Channel: Fox News
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all right we've been having a bit of a
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Truth and Reconciliation moment around
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the table a change of topic since the
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1980s one of the biggest arguments in
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economics was about something called the
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Laffer curve named for Ronald Reagan's
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economic advisor art Laffer who proved
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that if you cut taxes you actually get
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more government revenue by boosting
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economic activity for years Democrats
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bitterly contested this as a country
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well guess what happened in the
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California Assembly the other week
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Democrats worried that cannabis
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legalization hasn't boosted the cannabis
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economy as they promised now want tax
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cuts on the cannabis industry and guess
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what they used to justify it yes
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unbelievably the Laffer curve they
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literally did that alright so who better
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to break all this down than the man
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himself dr. art Laffer who I spoke to
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earlier thank you so much for joining us
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and just before we start I just want to
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say what an absolute honor and thrill it
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is to have you here when I was studying
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economics at Oxford in the late 1980s
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you were already a legend then I can
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barely believe it's really you and we
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have this conversation and what a great
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topic to have to I mean here we're
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talking about marijuana an academic
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professor you're out in California I can
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just see Spicoli on the front lawn of
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ridgemont high right now doing a doobie
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well isn't a wonderful life it's amazing
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is it so what do you make of it so
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finally well after all these years when
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it's something that they really care
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about the Democrats embrace the Laffer
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curve what do you make of it hypocrisy
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knows no bounds it knows no bounds for
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whatsoever it's obviously true the curve
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works really well I wrote a book about
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five or six years ago on tobacco
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taxation theory and practice and the
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Laffer curve abounds all over in tobacco
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taxation as well and now they find it in
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California it's amazing I mean if you
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lower the tax on cannabis you're gonna
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get snack revenues coming up high
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because everyone will get the munchies I
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mean it's perfect
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and so well while we're here you know
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and to get a little bit more serious I
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just wanted to get your take on the
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broader questions of what's going on
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around the tax debate right now because
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it feels like we we're going right back
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to almost away you came into it and
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we're seeing this very very strong
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demands for high-end punitive taxation
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coming from the left now but it is in
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response to something which I think a
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lot of people really feel which is this
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sense that you've got growing inequality
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and so you've got quite high numbers of
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people actually agreeing with these very
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high tax rates what do you think of that
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do you think the inequality is a real
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problem that we need to solve somehow
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and what would your approach be it's
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inequality is a real problem but we need
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to try to solve it but you don't solve
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it with higher taxes the most unequal
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areas the world were under the Soviet
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Union and all of these socialist states
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that's where all the government
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officials get all the wealth and
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everyone else is totally poor you know
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whenever you raise taxes on the rich you
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get lower tax revenues I mean happen
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with Harding and Coolidge it happened
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with Kennedy it happened with Reagan it
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happened I mean it's just amazing that
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this is just a common sense there but
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whenever you try to redistribute income
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Steve you always lower total income and
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if you go to a hundred percent of
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redistribution where everyone comes out
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exactly the same if we tax all that we
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tax everyone who makes above the average
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wage a hundred percent of the excess
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subsidize everyone below the average
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income up to the average income so
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everyone comes out equal
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I'll guarantee that everyone will come
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out equal at zero and that's the problem
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with this inequality
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is you lower the top you don't raise the
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bottom our problem is poor people not
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rich people and we need to help the poor
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get richer not to make the rich poor
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there you go I love it so let's just
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focus on that important priority so just
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set out some of the measures that you
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would like to see implemented to lift
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people up exactly as you said well I did
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a candidates tax system though who was a
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Governor of California Jerry Brown when
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he ran I was his economist and we did a
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broad-based flat tax we got rid of all
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federal taxes all of them and had
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covered an income tax that corporate tax
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cap
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gains tax the unearned income tax we got
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rid Medicare Medicaid taxes payroll
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taxes everything and had to flat rate
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taxes one on business net sales and one
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on personal on adjusted gross income at
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thirteen percent that was it
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it was much better than lap you know
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Laffer curve effect and jerry brown went
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from eighth in the race and the
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Democratic primary to second we would
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have beaten Clinton had it not been for
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a faux pas of his but it was that's the
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right tax to do and just a very quick
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last point what about business tax is
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that when I was working in in government
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as was a priority for me if you want to
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encourage jobs and wealth creation
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business tax reform is a priority what
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do you think we're we were it's not
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enough yeah we remember businesses don't
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pay taxes people do businesses do
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collect taxes and they do a very good
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job of it so I would have a flat tax and
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business net sales and a personal i'ma
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just ago income no deductions no
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exemptions no exclusions everyone pays
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the same tax rate if you make ten times
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as much as I do you're gonna pay ten
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times as much in taxes and that's the
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way it should be and then you'll have a
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really efficient system and we double
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GDP in five years
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