On the recordJanuary 20, 2011
I appreciate your thoughts and particularly the direction that you're taking, because my argument would be the problem that we've pointed out with overspending cannot be solved with increasing taxes, and I'd like to talk about that for a minute. My good friend from Ohio, just hold for a second. I'd like to try to illustrate something. When I first came here a couple of years back, people talked about the Laffer curve and the idea that you could have the government take more money in by reducing taxes. Now, I'm an engineer by training, and to me that seemed counterintuitive. How in the world can the government lower tax rates and take in more revenue? It seemed like such an odd thing. Then I started sort of puzzling it in my mind a little bit. I thought, Let's say that someone were to appoint you to be king for a year, but the only thing you can tax is a loaf of bread. So you start thinking, Huh, how do I get the most revenue for my country out of a loaf of bread?--because I'm a political guy, and I have to pay the bills of the Federal Government. So you start thinking. You say, Well, I think I'll put a one penny tax on every loaf of bread that people eat. No one will notice the penny, and I'll take in a certain amount of money. Then you start scratching your head and saying, What if I went the other way? Let's say I taxed a loaf of bread at $10 a loaf. Boy, then I'd get a lot more money in that way. Yeah, but the trouble is nobody would buy any bread.…
