Trump May End Income Taxes; Art Laffer On Next Economic Revolution
Summary
Market Outlook: The guest is optimistic on growth, citing recent 3.1% GDP with the Atlanta Fed projecting over 4%, and frames affordability as a supply-side function.
Gold: Gold prices hitting all-time highs were highlighted, alongside a sponsor spotlight on a gold developer with large Canadian projects and long-life production potential.
Materials Sector: The discussion emphasized the gold mining space, pointing to robust project economics and management execution as potential value drivers.
Stablecoins: Stablecoins and blockchain were praised as a payments revolution expanding dollar access globally and disintermediating middlemen.
US Treasuries: The guest argued stablecoins like Tether drive incremental demand for short-term T-bills, supporting Treasury markets so long as the dollar remains sound.
AI: AI is expected to meaningfully raise productivity and output, increasing prosperity even as it complicates tax collection dynamics.
Homebuilding: Cutting property taxes (e.g., Florida) was framed as boosting housing supply and affordability, implying upside for builders relative to subsidy-heavy approaches.
Tax Policy: Proposals included cutting income and payroll taxes funded by tariffs and closing large 501(c)(3) tax expenditures, with risks noted around overusing tariffs per the Laffer curve.
Transcript
over the next couple of years, I think we'll substantially be cutting and maybe cutting out completely, but we'll be cutting income tax. Could be almost completely cutting it because the money we're taking in is so is going to be so large. He's referring to the money from tariff revenues. This is a couple days ago. He made the statement to a group of military service members on a video call. What do you think about this potential proposal? >> I think it's terrific. I think he really understands the issue. >> We're talking about America's affordability crisis. What's next for the economy? what's tax for next for fiscal and monetary policies. Our guest today is Arthur Lafer, chairman of Ler Associates, formerly uh on the Council of Economic Advisors with President Reagan. He's best known for the Laugher Curve, Father of Supply side economics. He's also been awarded the Presidential Medal of Freedom by President Trump in Trump's first term in 2019. So, it's just an honor to have Dr. Lafer back again. Welcome back, Dr. Lafer. Good to see you. >> Thank you very much, David. I'm just going to correct. I wasn't on the Council of Economic Advisors. I was on the president's No, that don't don't apologize. The president's economic policy advisory board, which is an outside group, uncompensated. Uh I I take pride that I don't take money from politicians ever. >> If you were in the same >> Well, Dr. Laugher, if you in the same group today for President Trump, >> what would you be advising him to do? >> Well, I think I am in sort of that same group. I see him fairly frequently. Yeah. >> And I talk to him about the policies and then I go home. I don't get a paycheck from him. So, I'm not beholden in any way, shape, or form. I He can't fire me, hire me, double my pay have it. Nor could Reagan. I never took a job with him either, or Bill Clinton for that matter, or any of them except for Nixon. I did work for Nixon as George Schultz's right-hand person. And uh the advice I'd give President Trump is keep on doing it. Cut those tax rates, bring the payroll tax down to uh to get the economy jumping jump started. And uh I think those all those things push medical price uh transparency that'd be a great one to push. I love what he did in the big beautiful bill. I thought it was great. Um and I'm pretty excited about the prospects for the economy and I think the numbers are starting to come in pretty big David. I mean we had what 3.1% growth last quarter and this quarter is forecasted by the St. Lewis from what I hear by the uh by the Atlanta Fed as being a little over 4%. So that's you're getting some pretty nice numbers in there. >> The I'll get to economic stats in just a minute. So on the um on uh the administration's uh performance so far, if you want to call that, this is what uh President Trump posted on Truth Social earlier this week. I am the affordability president. Uh he said, "Because I've invoked favored nation status for the United States of America, drug prices are falling at levels never seen before. 500, 600,7% and more. No other president has been able to do this, but I have. This is also the answer to much less expensive and far better healthcare." Republicans, remember, this was done by us. Nobody else. This is a revolution in medicine. Um I am the affordability president. Okay, so he's talking about health care being more affordable, drug prices coming down. What about the other facets of the economy? CPI has gone up though all year. It's now that the highest level since January. >> Yeah. Well, the CPI was a lot higher than the term before. And the amount it's gone up, if you had a chart there on put it up on the screen, you probably do. Uh you could see that it's gone up a little bit, but it's not materially changed from where it was coming in. >> Sure. >> Uh it's not it's not skyrocketed by any means. Affordability is a very funny concept. Let let me go through affordability with you if I may. >> Yes. Affordability is a supply side construct. Period. It's nothing else but that. If there are no houses, houses are not affordable. If there are 10 houses, there are 10 houses that are affordable to at least 10 families. Period. The more the supply, the more affordable the product. So supply side economics is the answer to affordability. Let me give you an example. If there's a bumper crop in apples, if you have a huge increase in the supply of apples, uh the price of apples falls, apples become much more affordable because their price falls. If you have a shortage of apples, the price of apples rises, becomes less affordable. Affordability is exclusively a supply side phenomenon. And the more you produce of goods and services, the more affordable goods and services become. Period. And that's just plain period. And how do you get affordability? You do it by tax rate reductions, by increasing the supply, deregulation, sound money, free trade, minimal regulations, spending restraint. All of that is the way to increase affordability. And this president is doing a pretty damn good job on on on really making the economy grow and increase output. And if I were to, you know, he he says it much more valuably than I do, but he's a a a darn good president when it comes to affordability. Real wages are rising quite substantially, which is which is cool. They rose a lot during his first term and then shrank during Biden and they were flat during Obama and under both Trump terms, you've seen median wages, median real wages rise quite substantially. And I think that's going to continue. I'm I'm very optimistic as I was last time with you on what I think the future will be and I think it's going to be a very attractive future for all of us. >> Dr. L, let me just go back to your apple example. So in your example where you have a larger supply of apples, prices become more affordable, right? If I were a farmer where maybe a wholesaler of apples and I go to a region where I think that prices will prices will rise because that's I want to make money and then I want to supply more apples and then there's more supply. it floods the market and then prices stabilize and becomes affordable for everybody in that market. I understand that. But then as a develop, not a developer, but let's say as a as a wholesaler of apples or a farmer, I would then maybe leave that region because I would see that well prices are affordable. I'm not making a lot of money. So then wouldn't wouldn't wouldn't supply just leave that area eventually. >> No, I think you can make a lot of money as a as a wholesaler in cheap goods as well as expensive goods. You don't have to do a Tesla be a Tesla salesman to make money. You can also make money on selling lettuce and cabbage and bananas to a grocery store. So, you know, it's that's the middleman function where you have a need. But the bottom line is the more goods you get on the market in the marketplace, the more affordable goods and services become. That's all there is to it. So, all of this talk about affordability being inflation and all that is not true. What is true is are we increasing the output of goods and services that people can get? Yes, we are. And that increase has been quite substantial in the last two quarters. It really has been. Now, I hope it continues, but as I told you before, David, I'm a lot better at forecasting the past than I am the future. So, hold it with a big a big grain of salt on that one. >> Well, you're you're you're an honest economist. That's what you are. That's what >> Yeah, I think my ex-wife would disagree with you on that one. Let's get our home for debate. No, I'm kidding. Let's um we Let's talk about home prices, though. The home home affordability is the center of affordability in America. So, here we have uh Florida uh planning to eliminate property taxes. According to this article from realtor.com, Florida home prices could spike up to 9% under Dantis' plan to eliminate property taxes. Uh, D Santis argued that home taxes, sorry, homeowner taxes are oppressive and fuel wasteful spending by blow to the government officials. Property taxes effectively require homeowners uh to pay rent to the government, he said earlier this year. What is your view on eliminating homeowners taxes um taxes on homes? >> I'm very much in favor of limiting property taxes. I was very involved in Proposition 13 in California, as you know, even we talked about this time ago. Uh I I think what Dantis is doing is just spectacular. Uh you know, property taxes are a major reason why homes are not affordable. If you lower property tax rates, it is true, property values will rise. But if those property values rise with tax rates on properties going down, what's going to happen to the supply? Will builders build more? >> You better believe it. They'll build more and you'll have more houses. It's a supply side response to affordability. I can tell you that Ron DeSantis is right dead on the money on this one. He's doing a great job. Now, I haven't looked at his plan in detail, but uh getting rid of the property tax or keeping it very low like California has an extremely low property tax and the prices of houses are high, but let me tell you, houses are there all over the place, and they're really good houses. Gold prices have continuously hit all-time highs this year in 2025. Stellar Gold in the mining industry is a name worth watching. Today's sponsor, Stellar Gold, is a gold developer with two of the largest undeveloped gold projects in Canada. The Tower Gold Project in the well-known Timmans mining camp and the Colomac gold project in the Northwest Territories. They just released plans for the towers and the numbers are impressive. 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I've I've I've said recently I think we should do a 5% cut in the payroll tax from 15.3 to 10.3. that would be split evenly between employers and employees which means that it would cost a company less to hire someone which means they would like to hire more and there it also means that an employee will make more uh by 2 and a half% more therefore they'll want to work more you'll get a shift outwards in the supply production of goods and services and that will make all goods and services more affordable which is exactly what we need we need higher production of goods and services and that is exactly what creates some affordability. >> Well, let's compare D Santis's plan to Mdani's plan in New York. One of the signatures, one of the um one of the signatures of his housing proposal or set of policies is to initiate a $100 billion investment into subsidized um affordable rentstabilized housing units over the next decade. He plans to build 200,000 new uh rentstabilized units over the next 10 years. I mean, that's one approach. Let's let's talk about the differences here. >> Well, let's ask that. How does he get the hundred billion dollars to do that? Does he tax the living hell out of every worker and producer and every homeowner? >> Tax the millionaires. He's going to tax the wealthy people. >> So what I mean wealthy people will leave. I mean, you know, will that will if you tax wealthy people more, will they work harder? I don't think so. They'll just hire more lawyers, accountants, deferred income specialists, favor grabbers, lobbyists, presidents, politicians. They'll change the location of their income. They'll change the timing of their income. They'll change the uh uh composition of their income. They'll change the volume of their income. They'll do all those things. But believe me, they will not produce more if you tax them more. They will not. They'll produce less. And that means it's highly unaffordable what mom Donnie is doing. He's just not a good economist. I understand what he's trying to do. If you want to help poor people, you need jobs, output, and employment. And you need the production of more goods and services. That's all. Okay. It's really hard to get some guy who's unskilled, who's young, and not to make a million dollars a week. It's really hard to find that. But what you need to do is start them off in a job so they learn the requisite skills to earn that jobs wage and and build themselves up in the marketplace to be better. That's how you help poor people. You don't help poor people by taking it away from someone else and giving it to the poor people. That's just silly. When you give it to someone, they work less. when you take it from the other person, they work less and there's less goods available and it will be less affordable for everyone. Period. >> Uh I think was it Margaret Thatcher who said that the problem of socialism is that you eventually run out of money or people to tax and um I I think so here's the counterargument. Is New York an exception Dr. Ler in the sense that it's already the finance capital. It's it's very difficult for the wealthy to just pack up and leave. It's already the nexus of where they do business. And so you can basically he can mammi can get away with these policies. People won't leave is the argument. What do you think? >> Well, they will leave. There's, you know, a lot of them are hooked into place there. And of course, he thinks they're sitting ducks and he's just going to go, you know, take all the feathers out of them and all that. But no, they do leave and they do leave and they go to different places. They they quit work. I mean, they make less profits. With less profits on their good on their capital in New York, they're going to have less income and therefore they're going to pay less in taxes and on and on and on. You cannot tax an economy into prosperity. I'm just saying that, David. It's silly. It's dumb. When I say it that way, I think you can see through it. Mom Donnie is a very attractive guy. He's got charisma. He's got personality. You know, all of this stuff he does have. Uh, and now he's going to get a touch of reality. And there's a very good chance that someone like M Donnie could learn the lessons of the past and become a great mayor or governor someday after he learned. Ronald Reagan did it. Ronald Reagan was a terrible governor of the state of California. He raised taxes on everyone. He used the rich tax and all that. And who would have guessed that man could become the best president we ever had by lowering tax rates. He learned from what he saw and what he observed. And he was a great president. So Manny, I hope learns the lesson and becomes like other socialists who've seen the light becomes the most free market progrowth democratic economic capitalist person ever. But we'll have to wait and see what happens. Can you give us some examples uh in recent history of Americans implementing socialist policies and how that worked out for them? I'm not talking about Venezuela uh or Lebanon. I'm talking about in America. >> Talk about Joe Biden. I mean, we can talk about Joe Biden. How'd that work out for us in growth and all that and inflation? You can see how that didn't work out. You can see how other candidates didn't do well. You look at Johnson, Nixon, Ford, and Carter. That's four of them there put together, which I call the four stooges. It's the largest assemblage of bipartisan ignorance ever put on planet earth. They raised tax rates on the rich. They did all that stuff and the economy underperformed. You know, we have lots and lots of examples in our history. Roosevelt was another example of creating the great depression and it stayed there. I mean, Hoover and Roosevelt were a deadly combination. Uh Hoover did raise taxes from I mean he raised the highest marginal income tax rate all right from 25 to 63% Hoover did on January 1st 1932 then Roosevelt raised it on up to 94% in 1940 1944 and look at the horrible economy we had for the whole time there this is in my book taxes have consequences which I co-authored with Dr. Brian Demetrivic and Dr. Jean Singfield. So, you know, we go through every single period of US tax history, every single tax return. David, so that that's these are the results. Now, if you think it's going to be different with Mandani, you may be right. I doubt it. There's always hope and wishful thinking. >> Well, what about what about his plan to uh institute some um state-run grocery stores uh in certain neighborhoods that need it? Basically, uh more means of production will be controlled by the state. >> Yeah. in that now that's you're getting to a Marxist situation there which is very interesting that's no longer socialism that's no longer redistribution that's the government taking over the means of production which is a very different model this is the one we had with Wolf by the way Wol would agree with me on redistribution totally if you remember and we then talked about who should be the control of the means of production and I think the profit incentive uh makes a means of production much better uh than statewide power incentive but you know uh in areas where there isn't any food and people there, you know, I don't have a problem with the government providing, you know, services to people who are without any income or anything. I mean, uh, free healthc care clinics for the real poor, for the for the disadvantaged. I don't mind that. I don't mind food subsidies for the very poor. I mean, you know, this is just warming, heartwarming there. And I I think that can be done quite well, and I'll have to see how he does it. >> Okay. Uh in general, I would say most grocery stores should be privately run and run on an incentive basis, etc., but there are some in very poor neighborhoods that don't have the that uh that maybe they should do that and still at a substantial discount. >> I I think I know most people would agree with you. I think the the concern that I have in particular is how a how these grocery stores may be funded and b how they're going to stay shelved. I mean, who how to stop people from taking everything just because, you know, they're cheap. So, I I don't I don't know. Well, not only cheap, but also they're going to be government run. And what government officials going to care? I mean, you know that when you aren't doing on the when you're not hired on the profit incentive basis, on productivity basis, it's really hard to keep the ship afloat and keep it efficient. It's really hard. I mean, I've never seen I've never seen a post office being efficient. And if you want to make every grocery store the post office, go for it. But, you know, the Bureau Bureau of Vehicle Affairs, you know, th those guys aren't really efficient either. you've been down there and gotten your driver's license renewed and stuff, it's not the height of efficiency. So, if you're going to make the grocery stores that run that way, you're going to have a problem. >> Let's take a look now at uh this uh message from President Trump. Over the next couple of years, I think we'll substantially be cutting and maybe cutting out completely, but we'll be cutting income tax. Could be almost completely cutting it because the money we're taking in is so is going to be so large. He's referring to the money from tariff revenues. This is a couple days ago. He made the statement to a group of military service members on a video call. What do you think about this potential proposal? >> I think it's terrific. I think he really understands the issue. You know, we got Reagan to take the highest tax rate from 70% down to 28%. Uh I usually tease the president a little bit. You know, sir, you you're really good in the first term versus Reagan, but you know, Reagan got that highest tax rate down to 28%. And okay, are you know, I said, you're at 37. you got a ways to go to to match or beat Reagan. And so I think what he's doing here is really doing the right thing is get he could with those tariffs and that that money there and with the pay fors and the 501c3s he could 15% high tax rate right across the board flat 15% corporate 15% personal tax rate. He could do that quite easily and still be well within the bounds of of of the budget. What? What? Okay. How how would they how would the government stay in budget if we eliminate income taxes, for example? What wouldn't the fiscal deficit just completely balloon out of proportion? >> Yeah, let me just do the one I mean, you know, I I think it was 2023 that let me don't hold me to the specific year, but it's damn close. If you take all those 501c3s of $50 million or more, so that's the big ones. That's not your little churches and stuff like that. Okay, that's the big ones. their total tax exemp tax exemptions expenditures from people contributing and being taxfree was about uh $280 billion a year and but for the earnings on those investments that were taxfree was about another $30 billion a year. So you get you get something like $500 billion a year on these guys. That's about five trillion over a year. That's a lot of pay fors that you can do use to reduce tax rates by getting rid of those tax expenditures, those deductions, those loopholes, those horrible things. Sure. So, that's one. And then you've got tariff revenues coming in on top of that. And that could those tariff revenues could be used to fund social security, I think. And if you use them to fund social security and then can reduce the payroll tax by uh by 2 and a half% for employers and 2 and a.5% for employees, which I think Trump has floated as well. I think those would be the right things to do and uh you know I think he understands the incentive effect. Let let me ask it to you this way and David just let me put post it this way. Which would you think would be better for the country? To give money to people who don't work or to reduce tax rates on people who do work? >> Give money to people that don't work or reduce tax rates on people who >> do work. >> In theory, if you reduce taxes on people who do work, they would hire more people. Let's suppose if they were entrepreneurs and they would create jobs. Uh if you give money to people who don't work, well, we have to find out why they're not working. I mean, I'm all for social security for people that can't work. >> Makes it more attractive not to work. If you tax people who work and pay people who don't work, you're going to get a lot of people not working. What we need to do with the government funds is use them in a way to create affordability, i.e. increase the supply of goods and services. And that makes for affordability. And affordability is exclusively the domain of increases in output, employment, and production. That's what it is. And I think Trump is doing just the right thing. There was a there was a rumor that he wanted to have a a a tariff dividend to people and that made no sense to me. But a tariff tax rate recuction is a great idea and I think it would be wonderfully received. the issue of funding um revenues with tariffs or sorry funding uh funding um uh income with tariffs is is is is that eventually won't countries stop trading with the US or at least do so in lower volume and so the tariff revenues will actually be lower not higher >> that's the ler curve of international trade exactly right you know what you have to do is in moderation you know you you can't have at zero tax rates David you'll collect no revenue but you'll have lots of trade at 100% tax rates, you'll collect no revenue. You'll have high tax rates, but no one will work. And you know, there's a range in there that's the correct way. And what you do want to do is balance these out to provide the public service. And what you want to make sure happens. And let me just stress this very very clearly. You know what you want to do is you want to make it so that when the do when the benefit done by the last dollar of tax of money spent is a better than the damage done by the last dollar of taxes collected. You stop already. That's where you have the optimal tax rate. And that's true of trade, that's true of income, that's true of payroll tax, that's true of all of these taxes. And you just want to make sure you gear it so that you don't overspend or under tax. You don't want to undert tax. You don't want to, you know, have a bad military and get run over like Ukraine does because you don't have a defense system. You know, you want to make sure you balance your spending and your taxes to where you don't spend too much, but you also don't tax too much. >> I think some people watching this may wonder, gee, Dr. Ler, how is it that uh some places around the world have such low tax rates if not zero income tax rates, right? Look at Hong Kong. Look at the UAE, >> for example. How how are they doing that? And they're not broke. >> Well, something like the UAE, it's obvious what they do. They have one big natural resource. They make a lot of money on it. It's like Alaska. >> And Alaska is one of the few states that uh really cut it ever the only state that ever got rid of its income tax. In 1967, they discovered all that oil. And by 1982, they finally cut their income tax, okay? Waiting around as that money got bigger and bigger and bigger and bigger. Uh, and you know, if you're going to do it without the help of a big windfall, if you're going to do that, you have to be very careful in matching your taxes and your spending and making sure you don't squander the money that you tax and making sure that you don't overt tax and create a shortage of revenues just like you said on trade. >> Okay. Uh on the economy now uh you mentioned that uh you're looking forward to a stronger uh stronger economy and more growth ahead. Uh there's some data that may support you. There's some data that may contradict that claim. Uh this is perhaps one of them. I'll get your comment to this. US manufacturing slump deepens in November. For the ninth straight month, uh factories uh faced slumps in orders and higher prices for inputs. Uh the Institute for Supply Management said on Monday its manufacturing PMI dropped to 48.2 two last month from 48.7 in October reading below 50 indicates contraction. Uh and this has been going on for quite some time. Um this is how can you explain this and can we see a recovery from this? >> Yeah, I can't explain that specifically. I'm not familiar with that area. All I can tell you is the GDP growth which is all things including manufacturing. uh GDP growth is was 3.1% the last quarter we have and the Atlanta Fed says it's going to be over 4% next quarter which is unheard of in recent times. I think you're seeing that inflation numbers are doing fine and you're seeing GDP growth is coming through well but look at uh numbers current numbers are not uh not decisive as to which way we're going. They're not. I am betting on the consequences of the policies that will lead to much better numbers in the future is what I'm thinking will happen. Although the current numbers I am very pleased with how the current numbers are coming out, but they are not definitive. They are not yet. They will be definitive the year, but they're not definitive yet. >> I want to talk about your book in just a minute about uh the UK. Uh but before that, just let me just ask you just to think ahead here. How in the future would AI impact the LER curve? Think about it. Think about how AI would impact production and output and ultimately supply. How that shifts the supply curve and how that would impact the LER curve. Well, AI in the broadest sense of the word of having all information at the touch of your hand. All right? And that includes everything and expenditures and all that. You can just do anything you want quickly. That will have an enormously positive impact on output, employment, and production. It really will. people will not be wasting their time doing things that they shouldn't that they could get AEI to do. So it'll increase productivity dramatically and will increase output and employment and make us a lot more prosperous than otherwise would and and I'm excited by mad about it. Now there it'll also lead to the ability of the government to find tax payers and collect taxes from them but it'll also supply taxpayers with the ways of figure out what they can do to get around paying taxes. So I have no idea what the net balance will be on the ability of government to collect taxes but I do think it will reduce the ability of government to collect taxes above and beyond a certain point. Uh but it will increase productivity enormously, David. And I think it's something that we should be very excited about having. I mean, and that and cryptocurrencies, I think, are just spectacular innovations of the recent age of the of the world and the US especially and both of those have made it so that we can have so much more efficiency in our production of goods and services and make us all a lot richer. on cryptocurrencies. You and I have not had a chance yet to speak about uh the legislation that have um the pieces of legislation that have passed over the summer. Uh particularly the Genius Act. So this is uh Treasury Secretary Scott Bessant on the Genius Act. Stable coins represent a revolution in digital finance. He said the dollar now has an internet native payment rail that is fast, frictionless, and free of middlemen. This groundbreaking technology will buttress the dollar status as the global reserve currency, expand access to the dollar economy for billions across the globe and lead to a surge in demand for treasuries. Can you comment on that? Will it lead to a surge in demand for treasuries? I you know the first part of it is totally correct. He's completely right. Blockchain is one of the most efficient things in the world of getting rid of all the middlemen and all that stuff and it will that's exactly what I was talking about with Nvidia and AI and all that is right now. If you have something like tether which is a stable coin which is being used in central Africa, it's being used in Turkey and a lot of other remote places that have do not have any transactions medium. It is incredibly good and it does increase the demand for treasuries dramatically. What tether does is it sells a dollar of tether which can be done on your phone without anyone stealing it or falling in a mud puddle and losing it or anything like that. It really provides us to really remote areas like the Masai and other areas. It does that. But they then take that dollar and buy a short-term Treasury Tabell match. So it's exactly matched and that to me increases the demand for T bills by dollarizing Central Africa, by dollarizing Turkey, by dollarizing central Mongolia, all these other places. So that will be a huge increase in the demand for treasuries. Now, as long as the Treasury and as long as dollars stay sound and good, I think I think Scott Besson's correct. But if the dollar were, let's say, the one under Biden with a 22% inflation, I think he'd be wrong. People switch to other other security assets, not dollars. Speaking of the dollar, the DXY has fallen roughly, let me just take a look at this exactly about 9 and a half% since the beginning of the year. The Trump administration wanted a weaker dollar. Why ultimately do you think the Trump administration wants a weaker dollar? What what are they trying to achieve? >> I'm not sure they do want a weaker dollar. I I haven't gone that through this with them at all on what they want in the dollar. I mean, they do like the trade uh stuff. They do like US exports increasing, US imports declining, >> and I think they uh they view the dollar as being uh material input to that decision, which I do not. Uh but uh I don't think they are anxious to have a weak dollar. I I just don't. Uh but that's about as far as I know on their policies. I have not been in conversations with them about the fall of the dollar in the foreign exchanges. I haven't. >> Let's move on to talk about uh your book. Um it's titled uh Prosperity Through Growth and um and let me just pull this up uh while I show the book here. So you've talked about how the LER curve could be applied to the UK. So here we're shifting, we're talking about the other side of the pond now. you're paying too much tax. Pretty much everyone is. That's the view of Arthur Laugher, the man who back in 1974 drew the curve, showing his take on the relationship between tax rates and tax revenue, now known as a laugher curve. So, this is from Bloomberg um earlier in uh November. Your book, Prosperity through Growth, Growth, Boosting Living Standards in an Age of Autocracy and AI. Who's living in an age of autocracy? Dr. Ler, >> I don't know really. Uh they like the title of that very much and they like having AI in the title. I don't know why, but that was the recommendation there. But now the tax rate stuff is correct. Uh if you look at what happened to Gordon Brown when he raised uh taxes in the UK from 40p to 50p. Uh the economy collapsed. They had the I think it was 2011 2012 exchecker had the big laugher section. What was the consequences of those things? The consequences were the economy way underperformed in Britain. uh not only did underperform but a lot of people left Britain and went to do in Abu Dhabi and Dubai and all these other places so they could earn tax-free income and generally speaking revenues fell in Britain the government's revenues at the excheer fell quite substantially uh then Cameron came in afterwards and he was shocked at the results that Osborne shown in the in the excheer report there and so he lowered the tax rate from 50% 50% 50p to 45p not go even all the he was just sort of a little weak and wet. Uh but what they really need to do is bring that tax rate down really low and they need to bring it down to maybe 30 25% and get rid of the deductions, exemptions, exclusions and they could create an enormous growth. They think they think David that you can collect more money by raising tax rates in Britain and that is not true. It is not true. If you want to help the poor and you want to collect more money from the rich, lower tax rates on the rich and you will collect more money from them to be able to help the poor. And also you'll get more jobs, more output, more employment, and less people who need welfare. But they just can't get that in their craw. It's just I watched I I watched Reeves, Rachel Reeves there do the talk the other day. She's chancellor of the ex-checker now under Starmer. And I watched her try to mumble around about how we needed this big tax increase and she just doesn't get it. And I'm sure she's a very nice lady and all that, but they have 5 years of future there. No one can challenge the Labor Party for at least four or five years. Okay? And they can do the right thing now, but they don't do it now. Why is beyond me. Everyone knows that. Anyone with a common sense with just just enough to blow a handkerchief, enough brains there to do that can see what the results are, what all the results are from the excheer studies there. What Osborne's results, what all of these are is Britain is being taxed to death and it's declining. I I've got one statistic for you that's sort of fun. You ready for this one? >> Yeah, please. >> One statistic. On average, now this is on average, every seven days there's a country that celebrates its independence from Britain. >> Okay. Yeah. That's >> that's 50 countries have 60 53 countries have. What it does that number tells you that tells you once one it tells you how great Britain once was and it tells you how weak Britain now is. It tells you both of those stories. They went from the greatest capitalist nation in the world to being a weak little puppy dog now and there is no change in sight in their government as Lisa from this >> how did that happen and we don't have to get into a 30-minute discussion about the history of Britain but how did that happen fundamentally and can we draw lessons from that the fall of the British Empire and extrapolate that to the you know American empire today >> I would have thought it would be the just the other way around because if you have a government that has complete control you don't have to worry about the House, the Senate, or any of this stuff, the Bank of England, all that. You got them all. You can do the right policy. You can cut tax rates to 25%. You can cut welfare. You can do that. And in two or three years, you'll have the boom in the economy and all that stuff. It'll be great. And they should all know that that's the answer, but they don't. And so, you've just gone beyond my PhD. I don't get it. Maybe Professor Wolf can get it for us, but I sure can't. Well, we we'll get someone to debate you next time and maybe maybe >> I would love that. I mean, I I really enjoyed those two. Uh Steve Hank just spectacular. I just love the guy to death. And Wolf, I thought I thought the world of him. I thought he did a really good job. I mean, obviously, I thought I won. >> I thought I won, but not because he's dumb or bad. He's not. His arguments just aren't strong. >> Well, Dr. Ler, for the audience watching, Dr. laugh was referring to a a panel debate we did with uh Richard Wolf uh who's who's a guest on my program. We can check that that link down below. It's almost got a million views now. So, people have been watching that consistently over the last two years. But just going back to the um lowering the tax rate for the UK, Dr. Leer, are you assuming that when you lower the tax rate, there will be more investment and more consumption by the private sector and for >> and there'll be less tax evasion. There'll be less tax evasion. There'll be less tax avoidance. Less people will leave Britain and go to low tax environments. You know, they'll less hire less accountants, less lawyers, less deferred income specialists. They'll pay for less politicians. They'll pay their taxes fair and square instead of doing all the loophole stuff. And they'll produce more and they'll hire more and they'll make more profits and they'll make more goods. What's not to do? And they'll pay more in taxes. >> I'm just trying to play devil's advocate here. If I were a politician, I would say this is a riskier proposal, Dr. left because we don't know if the savings rate is going to go up or down. If it stays the same or even goes up, then the government loses money and we end up like Japan. >> Let me just let me answer your question on that one. That's why I was saying they don't have to worry about an election for 5 years, >> right? >> What what what do you care? I mean, if it would lead to the economic growth and all that, what's wrong with savings? What what's wrong with people buying capital equipment savings and investment? Of course, if investment goes way up, you're going to get savings going way up, but you're going to get higher returns on capital, greater productivity, increases in real output, employment, production. And if you're really worried about it, it's just not going to work out the next minute. You got five years, for God's sakes. And five years is a long time in politics. And by five years, let me tell you, Britain will be right on the top of the growth path of the planet if they brought their tax rate down to 20%. >> Okay? And by the way, at the same time getting rid of all the loopholes that you should do, too. You don't need loopholes at a 20% tax rate. You just don't pay your damn taxes and go on and work. But that's not what they do in Britain. They sit there and oh, let me collect my taxes and let me go after you and beat you up and do all that so I can give the money to people who don't work. That doesn't make sense. Is there is there like a reason as to why there the Europeans and it's not just Great Britain. It's a lot of Western European nations are pursuing a policy of of higher taxes and and u redistribution of wealth. Let's put it that way. Are they following the Scandinavian model here? >> No, it's not a model of any sort. It's just it's virtue signaling. They're all feel very embarrassed by who they are. Oh my god, I want to help the little children. Give them more money. Do it through the government. Not personally, by the They don't contribute to charities, these people. They just make other people contribute to the charities there and it's all virtual sign virtue signaling from these people and because they feel horribly guilty about being in the position they're in. I'm just a I'm just telling you that's what it is. And these people think that they're doing the Lord's work by making poor people stay poor. I don't think that's true. I think you need to try to do all you can to allow poor people to become wealthy and to increase their incomes, not lower their incomes. That's what I think is the right thing to do. >> There does seem to be a rising wealth gap and that is partly due to the fact that asset prices over the last two years have risen tremendously. The wealthy who own assets are wealthier as a result. The people who don't have stagnated in real wealth. People have pointed to this fact and given all sorts of reasons as to why this has happened and then all of course all sorts of prescriptions to how to fix that if we even need to fix that at all. Can we address that first and foremost? Do we need to fix that? >> Fix that. And what we do need to do is asset values go up, which means we need to have more investment, more companies, more output, more production, more employment. There's nothing wrong with with asset values going up. If your home price goes up, all what people's houses prices go up. What are how home builders going to do? They're going to build more. If you want to get cheap homes in this country, David, if you want cheap homes, go to West Virginia and Kentucky. You can buy a home for $25,000 on an acre of land with nothing there. It's a single wide and you can have that, but no one lives in them because they don't want to be there because it's the most depressed area in the world. What you want to do is you want to make it attractive for people to build homes. That's what's called affordability. And if you have high increasing asset values, you have more people wanting to start companies and making profits and doing all the good stuff there. Higher priced homes mean you attract new home builders. Your supply of homes increases and that makes home more affordable. I love what Deantis is doing by getting rid of the property tax in Florida. It's just great. By the way, I'm going to see him in the next couple of weeks. >> Yeah. >> On that. >> You you the LER curve was developed way before the um mainstream acceptance I guess of monetary modern monetary theory MMT uh which you know if I could paraphrase here broadly states that uh sovereign governments can issue currency at will uh and it may or may not even impact inflation. So if you have that scenario when the governments can just print money and according to this theory, inflation may not be directly impacted. Well, we don't need to lower taxes to incentivize more spending. We can just print our way out of a deficit. So the tax rate can actually be even higher. Governments can make more money either way. Right. >> Yeah. But this is a theory is flawed because it has a veil of bond bond illusion. Let me if I can say this. >> Yes. is if you get to buy more goods by not working, someone who works loses those goods. It's just accounting. It's all there is to it. This is the one we went through so detailed before is the transfer theorem. And let me uh let me go through it again with your audience here. Transfer theorem is when you f take from those who have a little bit more and you give to those who have a little bit less. By taking from those who have a little bit more, you reduce their incentives to produce and they will produce a little bit less. You with me? >> Yes. >> If you give to those who have a little bit less, you provide them with an alternative source of income other than working and they too will produce a little bit less. You with me? >> Okay. Yeah. >> The theorem here is really simple. Whenever you redistribute income, you always reduce total income. Period. That's the theorem. I don't give a damn if you're tall, short, old, young, fat, skinny, male, female, whatever the hell you are. That's math. Now, the lema from this theorem, which is so cool, is that, and I'm not going to prove this to you verbally, but the more you redistribute, the greater will be the reduction in total production. That should be pretty obvious. What if somebody makes a claim to you, Dr. Laugher, were the the challenge here is that if I were to take from multi-millionaires and billionaires through maybe a few additional points of extra extra tax, which would be immaterial to them because they're already excessively wealthy. I redistribute that to the less wealthy who then spends more. Wouldn't total output increase because the wealthy isn't going to spend less because they're taxed 2% extra, but the poor might spend more. That's just theory. >> I don't I don't think you're right. If you take from someone and give to someone else, >> the person you take from will spend less, the person you give it to will spend more. That's true. Those two will. >> And the multiplier effect on the person you give the money to will be there. That's true. But the multiplier will also be there from the people from whom you took the goods. >> That multiplier will be there as well. And those two offset each other. What doesn't offset is the incentive effect or the uh or the tax rate effect, the substitution effect of the transfer. This is what I'm focusing on here. If you were able to redistribute income so that everyone came out exactly the same, right? There will be no income whatsoever. Let let me prove that to you. To get everyone to be exactly the same, what you have to do is you have to tax everyone above the average income 100% of the excess. And you have to subsidize everyone below the average income up to the average income. That's the only way you can guarantee everyone comes out the same. >> Yeah. Now, if you actually did that, if you actually taxed everyone above the average income, 100% of the excess, >> and if you actually subsidize everyone below the average income up to the average income, I will stipulate today, counselor, everyone will come out equal at zero income. The only way you can reduce income inequality, the only way you can do it is by making everyone poorer. And the only way you can have exactly equal income in all society is to have everyone earn nothing. That is the only way it happens. So if you want income and if you want income equality, it has to be at zero because if one guy makes a buck more, all of a sudden you got greater income inequality. But if you want jobs for the poor, you want the most ine unequal income you can get. You need the growth in a natural way. You want rich people to produce as much as they possibly can and employ all those low-income people and let them become rich. >> The best form of welfare, as JohnF Kennedy said, is a good highpaying job. >> Well, let let me let me just end on on this note on on this part of the discussion. How would you convince the constituents of, let's say, New York or Los Angeles, Austin, Texas, whatever big city, Chicago, um, left-leaning cities that want higher taxes on the wealthy because here here here here's some facts. Uh, real wages for the bottom income distribution are not rising for a lot of these people. They feel stuck and they feel rightfully angry. And so when you introduce, let's say, I was going to ask you about a flat tax rate, but then those same people would argue, well, why am I paying the same tax rate as a billionaire? They should be paying more. How do you explain to somebody like that that perhaps if you tax the billionaires and multi-millionaires more, everyone is less is worse off? It it is counterintuitive. >> Yeah. If Yeah, I'll answer that in two ways. Two ways if I can. First one is, you know, if you make a thousand times more than I do, you should pay a thousand times more in taxes than I do. That's pure and simp. Everyone understands that. A family understands that you give equal proportions to people. If grandma's sick, the rich one gives more, but not percentage-wise more. Everyone contributes into the family. That's a very natural way that if you make more than I do, you pay more in taxes, but we pay the same percentage amount. That's a really understandable one. The second one is the is the hard lesson to learn. If you think you're going to get the rich people's money, you're stupid and crazy and wrong. They can they have the ways to avoid taxes. They can change the location of their income, the timing of their income, the volume of their income, the composition of their income. They can do that. They have the means to do it. They can hire lawyers, accountants, deferred income specialists, favor grabbers, lobbyists, presidents, congressmen. When you see Obama with five people in the room there, don't think it's five street people explaining to them what it's like being poor. It's five guys from Goldman Sachs who have a new tax dodge that they want to take back to their company. That's just what you're not going to get their money. Period. Now, do you want to destroy every job and still not get their money or would you like to get some of it and have a low rate broad-based flat tax that would be fair and give you a chance to re become one of the rich people? The one thing I found in Britain that is amazing, they're all anti- rich people, okay? Everyone is in Britain, but everyone buys lottery tickets to make the big lottery hit. Everyone wants to be rich, but they want to hate the rich. It's the stupidest thing I've ever seen. Everyone wants to become rich. The question is, how do you provide them with the opportunity to become richer? That's all I want to do is I want to be able to provide the poor with a chance of earning more income. You know, I don't hate rich people. I really love poor people and want them to be able to make a a better living by having less taxes, less burden on them. And you know, going after the rich is going to screw you every single time. >> Let's end on this note, Dr. Le, before I let you go. What's What are you looking forward to next when it comes to economic developments? Uh what's on your calendar that you're watching? It's rumored that um Kevin Hasset might be the the lead candidate for the next vet chair. So, maybe that's one thing, but uh anything else that you're watching that you're looking for? He's a great guy. He's a great guy. Kevin Worsh is a great guy. Kevin Hassets is the president's guy. I mean, really is there. And so, the president decides he wants to make a material difference at the Fed, you know, and he wants someone in there he knows, trusts, and it has to be Kevin Hasset. And Kevin Hasset has all the all the uh bonafide to be a great Fed chairman and to really change the Fed. Why do they have 400 PhD economists, former Larry Larry Summers students all sitting in there earning lots of money? There's been mission creep and all that stuff going on at the Fed. It needs to be taken down badly and brought back under control. That's true. I'm looking at all sorts of other things now. I, as I told you, we're looking at payroll tax rate reductions to use the tariff money there to reduce tax rates on payrolls to reduce income taxes. We have all sorts of openings there and the 501c3s and the tax expenditures there to bring the tax rate down to 15%. And there's all sorts of stuff we're doing in the medical community with prescription drugs, with uh um uh price transparency, with uh tobacco. I mean, you know, we have these things called IQOS, which are heated tobacco sticks, which could save lots and lots of people from horrible diseases who can't quit smoking. And Japan has probably half of the Japanese that smoke who smoke do IOS. They use warm tobacco rather than combustion products. So you we've got a lot of fun stuff coming along there. I could take you through lots of other stuff, but education reform is just huge and really wonderful stuff. And uh and AI AI is the stuff of dreams. So when you look at me, David, we're in for a really good period coming forward. And you just find some of those lefties to debate me and I'll teach them a lesson or two. >> Absolutely. We'll get someone We'll get someone to debate you. We We love you in uh solo interviews, but also debates as well. And uh >> well the debates are much better cuz and the wolf debate was and it was civilized. It was great. He was a fine guy. I like him a lot. I mean he's wrong but he's a good guy. Well that's okay. You wouldn't expect me to argue against a correct position. Do you? >> I'm sure he feels I'm sure the love is mutual. I'm sure he feels the same about you. But I >> think he does. I think he does. We both had the same professor Paul Ban who was the Marxist professor that he and I both had. So we had a lot in common. >> Uh let me you know what? Let me just let me just a end on one final final question. I don't know if anyone's ever asked you this before. Were you ever a Marxist when you were younger? >> I was very much enamored by Marxist ideology under Paul Ban at that time. Now I was a graduate student back then and I thought I really liked him. I liked it. I never was a Keynesian. I never was a socialist. I never believed in redistribution but I could understand the uh the government's ownership of the means of production. you know, uh that I could understand. Uh a as the years have gone on, uh I just think the personal incentives are so out of whack for Marxism that you really need personal there are lots and lots and lots of problems with private enterprise and capitalism. There are lots of problems, but there are a lot more problems with government running the means of production. Well, I I just noticed that there's so many people even in my personal life who were very liberal and, you know, borderline socialist leaning in their views when they were younger and as as they grew older, they became more conservative. >> I wasn't socialist. I was much more Marxist than I was socialist. >> I still believe the person's wage should be judged by productivity. It's just who should own the means of production. >> I see. >> And and some of the areas, I mean, you surely don't want private armies in the US. uh you know you don't want private roads in the middle of a city where you pay tuition you know every four blocks you know uh there are some things that the state should have the means of production and you know when you look at this a lot of the Europeans find it very attractive to always say well the private sector is not doing a good job let's put the government in but you know what do they do when the government's not doing a good job get it out and let the private sector come in that's what they should do but they don't >> thank you so much well there is a role for government control of the means of production but not all of them. Yeah, >> the private sector should control the vast majority of the means of production. Thanks David. Love you. >> Yeah, love you too. Uh well, yeah, as in all things in life, there must be a balance. I think that's the take from Dr. Ler statement. Where can we follow you? Where can we follow your work Dr. L on your show? >> On my show, I mentioned he has a new book. So, people should check out um for sale over in Britain. No, it's Yeah, Prosperity Through Growth. That's in Britain. I don't think it's for sale. I mean, I don't think it's published here, but it's in Britain, but you know, you can find I've got a website. I've got the Laugher Center. Anyone can find me on the internet there, my office stuff, but I don't do emails. I I you know, I don't I have a flip phone. I, you know, I'm a little bit of an I need AI in my brain. I I need to all that stuff. >> Okay, you take care, David. All right, you take care as well. We'll see you next time. Thank you. >> Thank you very much.
Trump May End Income Taxes; Art Laffer On Next Economic Revolution
Summary
Transcript
over the next couple of years, I think we'll substantially be cutting and maybe cutting out completely, but we'll be cutting income tax. Could be almost completely cutting it because the money we're taking in is so is going to be so large. He's referring to the money from tariff revenues. This is a couple days ago. He made the statement to a group of military service members on a video call. What do you think about this potential proposal? >> I think it's terrific. I think he really understands the issue. >> We're talking about America's affordability crisis. What's next for the economy? what's tax for next for fiscal and monetary policies. Our guest today is Arthur Lafer, chairman of Ler Associates, formerly uh on the Council of Economic Advisors with President Reagan. He's best known for the Laugher Curve, Father of Supply side economics. He's also been awarded the Presidential Medal of Freedom by President Trump in Trump's first term in 2019. So, it's just an honor to have Dr. Lafer back again. Welcome back, Dr. Lafer. Good to see you. >> Thank you very much, David. I'm just going to correct. I wasn't on the Council of Economic Advisors. I was on the president's No, that don't don't apologize. The president's economic policy advisory board, which is an outside group, uncompensated. Uh I I take pride that I don't take money from politicians ever. >> If you were in the same >> Well, Dr. Laugher, if you in the same group today for President Trump, >> what would you be advising him to do? >> Well, I think I am in sort of that same group. I see him fairly frequently. Yeah. >> And I talk to him about the policies and then I go home. I don't get a paycheck from him. So, I'm not beholden in any way, shape, or form. I He can't fire me, hire me, double my pay have it. Nor could Reagan. I never took a job with him either, or Bill Clinton for that matter, or any of them except for Nixon. I did work for Nixon as George Schultz's right-hand person. And uh the advice I'd give President Trump is keep on doing it. Cut those tax rates, bring the payroll tax down to uh to get the economy jumping jump started. And uh I think those all those things push medical price uh transparency that'd be a great one to push. I love what he did in the big beautiful bill. I thought it was great. Um and I'm pretty excited about the prospects for the economy and I think the numbers are starting to come in pretty big David. I mean we had what 3.1% growth last quarter and this quarter is forecasted by the St. Lewis from what I hear by the uh by the Atlanta Fed as being a little over 4%. So that's you're getting some pretty nice numbers in there. >> The I'll get to economic stats in just a minute. So on the um on uh the administration's uh performance so far, if you want to call that, this is what uh President Trump posted on Truth Social earlier this week. I am the affordability president. Uh he said, "Because I've invoked favored nation status for the United States of America, drug prices are falling at levels never seen before. 500, 600,7% and more. No other president has been able to do this, but I have. This is also the answer to much less expensive and far better healthcare." Republicans, remember, this was done by us. Nobody else. This is a revolution in medicine. Um I am the affordability president. Okay, so he's talking about health care being more affordable, drug prices coming down. What about the other facets of the economy? CPI has gone up though all year. It's now that the highest level since January. >> Yeah. Well, the CPI was a lot higher than the term before. And the amount it's gone up, if you had a chart there on put it up on the screen, you probably do. Uh you could see that it's gone up a little bit, but it's not materially changed from where it was coming in. >> Sure. >> Uh it's not it's not skyrocketed by any means. Affordability is a very funny concept. Let let me go through affordability with you if I may. >> Yes. Affordability is a supply side construct. Period. It's nothing else but that. If there are no houses, houses are not affordable. If there are 10 houses, there are 10 houses that are affordable to at least 10 families. Period. The more the supply, the more affordable the product. So supply side economics is the answer to affordability. Let me give you an example. If there's a bumper crop in apples, if you have a huge increase in the supply of apples, uh the price of apples falls, apples become much more affordable because their price falls. If you have a shortage of apples, the price of apples rises, becomes less affordable. Affordability is exclusively a supply side phenomenon. And the more you produce of goods and services, the more affordable goods and services become. Period. And that's just plain period. And how do you get affordability? You do it by tax rate reductions, by increasing the supply, deregulation, sound money, free trade, minimal regulations, spending restraint. All of that is the way to increase affordability. And this president is doing a pretty damn good job on on on really making the economy grow and increase output. And if I were to, you know, he he says it much more valuably than I do, but he's a a a darn good president when it comes to affordability. Real wages are rising quite substantially, which is which is cool. They rose a lot during his first term and then shrank during Biden and they were flat during Obama and under both Trump terms, you've seen median wages, median real wages rise quite substantially. And I think that's going to continue. I'm I'm very optimistic as I was last time with you on what I think the future will be and I think it's going to be a very attractive future for all of us. >> Dr. L, let me just go back to your apple example. So in your example where you have a larger supply of apples, prices become more affordable, right? If I were a farmer where maybe a wholesaler of apples and I go to a region where I think that prices will prices will rise because that's I want to make money and then I want to supply more apples and then there's more supply. it floods the market and then prices stabilize and becomes affordable for everybody in that market. I understand that. But then as a develop, not a developer, but let's say as a as a wholesaler of apples or a farmer, I would then maybe leave that region because I would see that well prices are affordable. I'm not making a lot of money. So then wouldn't wouldn't wouldn't supply just leave that area eventually. >> No, I think you can make a lot of money as a as a wholesaler in cheap goods as well as expensive goods. You don't have to do a Tesla be a Tesla salesman to make money. You can also make money on selling lettuce and cabbage and bananas to a grocery store. So, you know, it's that's the middleman function where you have a need. But the bottom line is the more goods you get on the market in the marketplace, the more affordable goods and services become. That's all there is to it. So, all of this talk about affordability being inflation and all that is not true. What is true is are we increasing the output of goods and services that people can get? Yes, we are. And that increase has been quite substantial in the last two quarters. It really has been. Now, I hope it continues, but as I told you before, David, I'm a lot better at forecasting the past than I am the future. So, hold it with a big a big grain of salt on that one. >> Well, you're you're you're an honest economist. That's what you are. That's what >> Yeah, I think my ex-wife would disagree with you on that one. Let's get our home for debate. No, I'm kidding. Let's um we Let's talk about home prices, though. The home home affordability is the center of affordability in America. So, here we have uh Florida uh planning to eliminate property taxes. According to this article from realtor.com, Florida home prices could spike up to 9% under Dantis' plan to eliminate property taxes. Uh, D Santis argued that home taxes, sorry, homeowner taxes are oppressive and fuel wasteful spending by blow to the government officials. Property taxes effectively require homeowners uh to pay rent to the government, he said earlier this year. What is your view on eliminating homeowners taxes um taxes on homes? >> I'm very much in favor of limiting property taxes. I was very involved in Proposition 13 in California, as you know, even we talked about this time ago. Uh I I think what Dantis is doing is just spectacular. Uh you know, property taxes are a major reason why homes are not affordable. If you lower property tax rates, it is true, property values will rise. But if those property values rise with tax rates on properties going down, what's going to happen to the supply? Will builders build more? >> You better believe it. They'll build more and you'll have more houses. It's a supply side response to affordability. I can tell you that Ron DeSantis is right dead on the money on this one. He's doing a great job. Now, I haven't looked at his plan in detail, but uh getting rid of the property tax or keeping it very low like California has an extremely low property tax and the prices of houses are high, but let me tell you, houses are there all over the place, and they're really good houses. Gold prices have continuously hit all-time highs this year in 2025. Stellar Gold in the mining industry is a name worth watching. Today's sponsor, Stellar Gold, is a gold developer with two of the largest undeveloped gold projects in Canada. The Tower Gold Project in the well-known Timmans mining camp and the Colomac gold project in the Northwest Territories. They just released plans for the towers and the numbers are impressive. 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I've I've I've said recently I think we should do a 5% cut in the payroll tax from 15.3 to 10.3. that would be split evenly between employers and employees which means that it would cost a company less to hire someone which means they would like to hire more and there it also means that an employee will make more uh by 2 and a half% more therefore they'll want to work more you'll get a shift outwards in the supply production of goods and services and that will make all goods and services more affordable which is exactly what we need we need higher production of goods and services and that is exactly what creates some affordability. >> Well, let's compare D Santis's plan to Mdani's plan in New York. One of the signatures, one of the um one of the signatures of his housing proposal or set of policies is to initiate a $100 billion investment into subsidized um affordable rentstabilized housing units over the next decade. He plans to build 200,000 new uh rentstabilized units over the next 10 years. I mean, that's one approach. Let's let's talk about the differences here. >> Well, let's ask that. How does he get the hundred billion dollars to do that? Does he tax the living hell out of every worker and producer and every homeowner? >> Tax the millionaires. He's going to tax the wealthy people. >> So what I mean wealthy people will leave. I mean, you know, will that will if you tax wealthy people more, will they work harder? I don't think so. They'll just hire more lawyers, accountants, deferred income specialists, favor grabbers, lobbyists, presidents, politicians. They'll change the location of their income. They'll change the timing of their income. They'll change the uh uh composition of their income. They'll change the volume of their income. They'll do all those things. But believe me, they will not produce more if you tax them more. They will not. They'll produce less. And that means it's highly unaffordable what mom Donnie is doing. He's just not a good economist. I understand what he's trying to do. If you want to help poor people, you need jobs, output, and employment. And you need the production of more goods and services. That's all. Okay. It's really hard to get some guy who's unskilled, who's young, and not to make a million dollars a week. It's really hard to find that. But what you need to do is start them off in a job so they learn the requisite skills to earn that jobs wage and and build themselves up in the marketplace to be better. That's how you help poor people. You don't help poor people by taking it away from someone else and giving it to the poor people. That's just silly. When you give it to someone, they work less. when you take it from the other person, they work less and there's less goods available and it will be less affordable for everyone. Period. >> Uh I think was it Margaret Thatcher who said that the problem of socialism is that you eventually run out of money or people to tax and um I I think so here's the counterargument. Is New York an exception Dr. Ler in the sense that it's already the finance capital. It's it's very difficult for the wealthy to just pack up and leave. It's already the nexus of where they do business. And so you can basically he can mammi can get away with these policies. People won't leave is the argument. What do you think? >> Well, they will leave. There's, you know, a lot of them are hooked into place there. And of course, he thinks they're sitting ducks and he's just going to go, you know, take all the feathers out of them and all that. But no, they do leave and they do leave and they go to different places. They they quit work. I mean, they make less profits. With less profits on their good on their capital in New York, they're going to have less income and therefore they're going to pay less in taxes and on and on and on. You cannot tax an economy into prosperity. I'm just saying that, David. It's silly. It's dumb. When I say it that way, I think you can see through it. Mom Donnie is a very attractive guy. He's got charisma. He's got personality. You know, all of this stuff he does have. Uh, and now he's going to get a touch of reality. And there's a very good chance that someone like M Donnie could learn the lessons of the past and become a great mayor or governor someday after he learned. Ronald Reagan did it. Ronald Reagan was a terrible governor of the state of California. He raised taxes on everyone. He used the rich tax and all that. And who would have guessed that man could become the best president we ever had by lowering tax rates. He learned from what he saw and what he observed. And he was a great president. So Manny, I hope learns the lesson and becomes like other socialists who've seen the light becomes the most free market progrowth democratic economic capitalist person ever. But we'll have to wait and see what happens. Can you give us some examples uh in recent history of Americans implementing socialist policies and how that worked out for them? I'm not talking about Venezuela uh or Lebanon. I'm talking about in America. >> Talk about Joe Biden. I mean, we can talk about Joe Biden. How'd that work out for us in growth and all that and inflation? You can see how that didn't work out. You can see how other candidates didn't do well. You look at Johnson, Nixon, Ford, and Carter. That's four of them there put together, which I call the four stooges. It's the largest assemblage of bipartisan ignorance ever put on planet earth. They raised tax rates on the rich. They did all that stuff and the economy underperformed. You know, we have lots and lots of examples in our history. Roosevelt was another example of creating the great depression and it stayed there. I mean, Hoover and Roosevelt were a deadly combination. Uh Hoover did raise taxes from I mean he raised the highest marginal income tax rate all right from 25 to 63% Hoover did on January 1st 1932 then Roosevelt raised it on up to 94% in 1940 1944 and look at the horrible economy we had for the whole time there this is in my book taxes have consequences which I co-authored with Dr. Brian Demetrivic and Dr. Jean Singfield. So, you know, we go through every single period of US tax history, every single tax return. David, so that that's these are the results. Now, if you think it's going to be different with Mandani, you may be right. I doubt it. There's always hope and wishful thinking. >> Well, what about what about his plan to uh institute some um state-run grocery stores uh in certain neighborhoods that need it? Basically, uh more means of production will be controlled by the state. >> Yeah. in that now that's you're getting to a Marxist situation there which is very interesting that's no longer socialism that's no longer redistribution that's the government taking over the means of production which is a very different model this is the one we had with Wolf by the way Wol would agree with me on redistribution totally if you remember and we then talked about who should be the control of the means of production and I think the profit incentive uh makes a means of production much better uh than statewide power incentive but you know uh in areas where there isn't any food and people there, you know, I don't have a problem with the government providing, you know, services to people who are without any income or anything. I mean, uh, free healthc care clinics for the real poor, for the for the disadvantaged. I don't mind that. I don't mind food subsidies for the very poor. I mean, you know, this is just warming, heartwarming there. And I I think that can be done quite well, and I'll have to see how he does it. >> Okay. Uh in general, I would say most grocery stores should be privately run and run on an incentive basis, etc., but there are some in very poor neighborhoods that don't have the that uh that maybe they should do that and still at a substantial discount. >> I I think I know most people would agree with you. I think the the concern that I have in particular is how a how these grocery stores may be funded and b how they're going to stay shelved. I mean, who how to stop people from taking everything just because, you know, they're cheap. So, I I don't I don't know. Well, not only cheap, but also they're going to be government run. And what government officials going to care? I mean, you know that when you aren't doing on the when you're not hired on the profit incentive basis, on productivity basis, it's really hard to keep the ship afloat and keep it efficient. It's really hard. I mean, I've never seen I've never seen a post office being efficient. And if you want to make every grocery store the post office, go for it. But, you know, the Bureau Bureau of Vehicle Affairs, you know, th those guys aren't really efficient either. you've been down there and gotten your driver's license renewed and stuff, it's not the height of efficiency. So, if you're going to make the grocery stores that run that way, you're going to have a problem. >> Let's take a look now at uh this uh message from President Trump. Over the next couple of years, I think we'll substantially be cutting and maybe cutting out completely, but we'll be cutting income tax. Could be almost completely cutting it because the money we're taking in is so is going to be so large. He's referring to the money from tariff revenues. This is a couple days ago. He made the statement to a group of military service members on a video call. What do you think about this potential proposal? >> I think it's terrific. I think he really understands the issue. You know, we got Reagan to take the highest tax rate from 70% down to 28%. Uh I usually tease the president a little bit. You know, sir, you you're really good in the first term versus Reagan, but you know, Reagan got that highest tax rate down to 28%. And okay, are you know, I said, you're at 37. you got a ways to go to to match or beat Reagan. And so I think what he's doing here is really doing the right thing is get he could with those tariffs and that that money there and with the pay fors and the 501c3s he could 15% high tax rate right across the board flat 15% corporate 15% personal tax rate. He could do that quite easily and still be well within the bounds of of of the budget. What? What? Okay. How how would they how would the government stay in budget if we eliminate income taxes, for example? What wouldn't the fiscal deficit just completely balloon out of proportion? >> Yeah, let me just do the one I mean, you know, I I think it was 2023 that let me don't hold me to the specific year, but it's damn close. If you take all those 501c3s of $50 million or more, so that's the big ones. That's not your little churches and stuff like that. Okay, that's the big ones. their total tax exemp tax exemptions expenditures from people contributing and being taxfree was about uh $280 billion a year and but for the earnings on those investments that were taxfree was about another $30 billion a year. So you get you get something like $500 billion a year on these guys. That's about five trillion over a year. That's a lot of pay fors that you can do use to reduce tax rates by getting rid of those tax expenditures, those deductions, those loopholes, those horrible things. Sure. So, that's one. And then you've got tariff revenues coming in on top of that. And that could those tariff revenues could be used to fund social security, I think. And if you use them to fund social security and then can reduce the payroll tax by uh by 2 and a half% for employers and 2 and a.5% for employees, which I think Trump has floated as well. I think those would be the right things to do and uh you know I think he understands the incentive effect. Let let me ask it to you this way and David just let me put post it this way. Which would you think would be better for the country? To give money to people who don't work or to reduce tax rates on people who do work? >> Give money to people that don't work or reduce tax rates on people who >> do work. >> In theory, if you reduce taxes on people who do work, they would hire more people. Let's suppose if they were entrepreneurs and they would create jobs. Uh if you give money to people who don't work, well, we have to find out why they're not working. I mean, I'm all for social security for people that can't work. >> Makes it more attractive not to work. If you tax people who work and pay people who don't work, you're going to get a lot of people not working. What we need to do with the government funds is use them in a way to create affordability, i.e. increase the supply of goods and services. And that makes for affordability. And affordability is exclusively the domain of increases in output, employment, and production. That's what it is. And I think Trump is doing just the right thing. There was a there was a rumor that he wanted to have a a a tariff dividend to people and that made no sense to me. But a tariff tax rate recuction is a great idea and I think it would be wonderfully received. the issue of funding um revenues with tariffs or sorry funding uh funding um uh income with tariffs is is is is that eventually won't countries stop trading with the US or at least do so in lower volume and so the tariff revenues will actually be lower not higher >> that's the ler curve of international trade exactly right you know what you have to do is in moderation you know you you can't have at zero tax rates David you'll collect no revenue but you'll have lots of trade at 100% tax rates, you'll collect no revenue. You'll have high tax rates, but no one will work. And you know, there's a range in there that's the correct way. And what you do want to do is balance these out to provide the public service. And what you want to make sure happens. And let me just stress this very very clearly. You know what you want to do is you want to make it so that when the do when the benefit done by the last dollar of tax of money spent is a better than the damage done by the last dollar of taxes collected. You stop already. That's where you have the optimal tax rate. And that's true of trade, that's true of income, that's true of payroll tax, that's true of all of these taxes. And you just want to make sure you gear it so that you don't overspend or under tax. You don't want to undert tax. You don't want to, you know, have a bad military and get run over like Ukraine does because you don't have a defense system. You know, you want to make sure you balance your spending and your taxes to where you don't spend too much, but you also don't tax too much. >> I think some people watching this may wonder, gee, Dr. Ler, how is it that uh some places around the world have such low tax rates if not zero income tax rates, right? Look at Hong Kong. Look at the UAE, >> for example. How how are they doing that? And they're not broke. >> Well, something like the UAE, it's obvious what they do. They have one big natural resource. They make a lot of money on it. It's like Alaska. >> And Alaska is one of the few states that uh really cut it ever the only state that ever got rid of its income tax. In 1967, they discovered all that oil. And by 1982, they finally cut their income tax, okay? Waiting around as that money got bigger and bigger and bigger and bigger. Uh, and you know, if you're going to do it without the help of a big windfall, if you're going to do that, you have to be very careful in matching your taxes and your spending and making sure you don't squander the money that you tax and making sure that you don't overt tax and create a shortage of revenues just like you said on trade. >> Okay. Uh on the economy now uh you mentioned that uh you're looking forward to a stronger uh stronger economy and more growth ahead. Uh there's some data that may support you. There's some data that may contradict that claim. Uh this is perhaps one of them. I'll get your comment to this. US manufacturing slump deepens in November. For the ninth straight month, uh factories uh faced slumps in orders and higher prices for inputs. Uh the Institute for Supply Management said on Monday its manufacturing PMI dropped to 48.2 two last month from 48.7 in October reading below 50 indicates contraction. Uh and this has been going on for quite some time. Um this is how can you explain this and can we see a recovery from this? >> Yeah, I can't explain that specifically. I'm not familiar with that area. All I can tell you is the GDP growth which is all things including manufacturing. uh GDP growth is was 3.1% the last quarter we have and the Atlanta Fed says it's going to be over 4% next quarter which is unheard of in recent times. I think you're seeing that inflation numbers are doing fine and you're seeing GDP growth is coming through well but look at uh numbers current numbers are not uh not decisive as to which way we're going. They're not. I am betting on the consequences of the policies that will lead to much better numbers in the future is what I'm thinking will happen. Although the current numbers I am very pleased with how the current numbers are coming out, but they are not definitive. They are not yet. They will be definitive the year, but they're not definitive yet. >> I want to talk about your book in just a minute about uh the UK. Uh but before that, just let me just ask you just to think ahead here. How in the future would AI impact the LER curve? Think about it. Think about how AI would impact production and output and ultimately supply. How that shifts the supply curve and how that would impact the LER curve. Well, AI in the broadest sense of the word of having all information at the touch of your hand. All right? And that includes everything and expenditures and all that. You can just do anything you want quickly. That will have an enormously positive impact on output, employment, and production. It really will. people will not be wasting their time doing things that they shouldn't that they could get AEI to do. So it'll increase productivity dramatically and will increase output and employment and make us a lot more prosperous than otherwise would and and I'm excited by mad about it. Now there it'll also lead to the ability of the government to find tax payers and collect taxes from them but it'll also supply taxpayers with the ways of figure out what they can do to get around paying taxes. So I have no idea what the net balance will be on the ability of government to collect taxes but I do think it will reduce the ability of government to collect taxes above and beyond a certain point. Uh but it will increase productivity enormously, David. And I think it's something that we should be very excited about having. I mean, and that and cryptocurrencies, I think, are just spectacular innovations of the recent age of the of the world and the US especially and both of those have made it so that we can have so much more efficiency in our production of goods and services and make us all a lot richer. on cryptocurrencies. You and I have not had a chance yet to speak about uh the legislation that have um the pieces of legislation that have passed over the summer. Uh particularly the Genius Act. So this is uh Treasury Secretary Scott Bessant on the Genius Act. Stable coins represent a revolution in digital finance. He said the dollar now has an internet native payment rail that is fast, frictionless, and free of middlemen. This groundbreaking technology will buttress the dollar status as the global reserve currency, expand access to the dollar economy for billions across the globe and lead to a surge in demand for treasuries. Can you comment on that? Will it lead to a surge in demand for treasuries? I you know the first part of it is totally correct. He's completely right. Blockchain is one of the most efficient things in the world of getting rid of all the middlemen and all that stuff and it will that's exactly what I was talking about with Nvidia and AI and all that is right now. If you have something like tether which is a stable coin which is being used in central Africa, it's being used in Turkey and a lot of other remote places that have do not have any transactions medium. It is incredibly good and it does increase the demand for treasuries dramatically. What tether does is it sells a dollar of tether which can be done on your phone without anyone stealing it or falling in a mud puddle and losing it or anything like that. It really provides us to really remote areas like the Masai and other areas. It does that. But they then take that dollar and buy a short-term Treasury Tabell match. So it's exactly matched and that to me increases the demand for T bills by dollarizing Central Africa, by dollarizing Turkey, by dollarizing central Mongolia, all these other places. So that will be a huge increase in the demand for treasuries. Now, as long as the Treasury and as long as dollars stay sound and good, I think I think Scott Besson's correct. But if the dollar were, let's say, the one under Biden with a 22% inflation, I think he'd be wrong. People switch to other other security assets, not dollars. Speaking of the dollar, the DXY has fallen roughly, let me just take a look at this exactly about 9 and a half% since the beginning of the year. The Trump administration wanted a weaker dollar. Why ultimately do you think the Trump administration wants a weaker dollar? What what are they trying to achieve? >> I'm not sure they do want a weaker dollar. I I haven't gone that through this with them at all on what they want in the dollar. I mean, they do like the trade uh stuff. They do like US exports increasing, US imports declining, >> and I think they uh they view the dollar as being uh material input to that decision, which I do not. Uh but uh I don't think they are anxious to have a weak dollar. I I just don't. Uh but that's about as far as I know on their policies. I have not been in conversations with them about the fall of the dollar in the foreign exchanges. I haven't. >> Let's move on to talk about uh your book. Um it's titled uh Prosperity Through Growth and um and let me just pull this up uh while I show the book here. So you've talked about how the LER curve could be applied to the UK. So here we're shifting, we're talking about the other side of the pond now. you're paying too much tax. Pretty much everyone is. That's the view of Arthur Laugher, the man who back in 1974 drew the curve, showing his take on the relationship between tax rates and tax revenue, now known as a laugher curve. So, this is from Bloomberg um earlier in uh November. Your book, Prosperity through Growth, Growth, Boosting Living Standards in an Age of Autocracy and AI. Who's living in an age of autocracy? Dr. Ler, >> I don't know really. Uh they like the title of that very much and they like having AI in the title. I don't know why, but that was the recommendation there. But now the tax rate stuff is correct. Uh if you look at what happened to Gordon Brown when he raised uh taxes in the UK from 40p to 50p. Uh the economy collapsed. They had the I think it was 2011 2012 exchecker had the big laugher section. What was the consequences of those things? The consequences were the economy way underperformed in Britain. uh not only did underperform but a lot of people left Britain and went to do in Abu Dhabi and Dubai and all these other places so they could earn tax-free income and generally speaking revenues fell in Britain the government's revenues at the excheer fell quite substantially uh then Cameron came in afterwards and he was shocked at the results that Osborne shown in the in the excheer report there and so he lowered the tax rate from 50% 50% 50p to 45p not go even all the he was just sort of a little weak and wet. Uh but what they really need to do is bring that tax rate down really low and they need to bring it down to maybe 30 25% and get rid of the deductions, exemptions, exclusions and they could create an enormous growth. They think they think David that you can collect more money by raising tax rates in Britain and that is not true. It is not true. If you want to help the poor and you want to collect more money from the rich, lower tax rates on the rich and you will collect more money from them to be able to help the poor. And also you'll get more jobs, more output, more employment, and less people who need welfare. But they just can't get that in their craw. It's just I watched I I watched Reeves, Rachel Reeves there do the talk the other day. She's chancellor of the ex-checker now under Starmer. And I watched her try to mumble around about how we needed this big tax increase and she just doesn't get it. And I'm sure she's a very nice lady and all that, but they have 5 years of future there. No one can challenge the Labor Party for at least four or five years. Okay? And they can do the right thing now, but they don't do it now. Why is beyond me. Everyone knows that. Anyone with a common sense with just just enough to blow a handkerchief, enough brains there to do that can see what the results are, what all the results are from the excheer studies there. What Osborne's results, what all of these are is Britain is being taxed to death and it's declining. I I've got one statistic for you that's sort of fun. You ready for this one? >> Yeah, please. >> One statistic. On average, now this is on average, every seven days there's a country that celebrates its independence from Britain. >> Okay. Yeah. That's >> that's 50 countries have 60 53 countries have. What it does that number tells you that tells you once one it tells you how great Britain once was and it tells you how weak Britain now is. It tells you both of those stories. They went from the greatest capitalist nation in the world to being a weak little puppy dog now and there is no change in sight in their government as Lisa from this >> how did that happen and we don't have to get into a 30-minute discussion about the history of Britain but how did that happen fundamentally and can we draw lessons from that the fall of the British Empire and extrapolate that to the you know American empire today >> I would have thought it would be the just the other way around because if you have a government that has complete control you don't have to worry about the House, the Senate, or any of this stuff, the Bank of England, all that. You got them all. You can do the right policy. You can cut tax rates to 25%. You can cut welfare. You can do that. And in two or three years, you'll have the boom in the economy and all that stuff. It'll be great. And they should all know that that's the answer, but they don't. And so, you've just gone beyond my PhD. I don't get it. Maybe Professor Wolf can get it for us, but I sure can't. Well, we we'll get someone to debate you next time and maybe maybe >> I would love that. I mean, I I really enjoyed those two. Uh Steve Hank just spectacular. I just love the guy to death. And Wolf, I thought I thought the world of him. I thought he did a really good job. I mean, obviously, I thought I won. >> I thought I won, but not because he's dumb or bad. He's not. His arguments just aren't strong. >> Well, Dr. Ler, for the audience watching, Dr. laugh was referring to a a panel debate we did with uh Richard Wolf uh who's who's a guest on my program. We can check that that link down below. It's almost got a million views now. So, people have been watching that consistently over the last two years. But just going back to the um lowering the tax rate for the UK, Dr. Leer, are you assuming that when you lower the tax rate, there will be more investment and more consumption by the private sector and for >> and there'll be less tax evasion. There'll be less tax evasion. There'll be less tax avoidance. Less people will leave Britain and go to low tax environments. You know, they'll less hire less accountants, less lawyers, less deferred income specialists. They'll pay for less politicians. They'll pay their taxes fair and square instead of doing all the loophole stuff. And they'll produce more and they'll hire more and they'll make more profits and they'll make more goods. What's not to do? And they'll pay more in taxes. >> I'm just trying to play devil's advocate here. If I were a politician, I would say this is a riskier proposal, Dr. left because we don't know if the savings rate is going to go up or down. If it stays the same or even goes up, then the government loses money and we end up like Japan. >> Let me just let me answer your question on that one. That's why I was saying they don't have to worry about an election for 5 years, >> right? >> What what what do you care? I mean, if it would lead to the economic growth and all that, what's wrong with savings? What what's wrong with people buying capital equipment savings and investment? Of course, if investment goes way up, you're going to get savings going way up, but you're going to get higher returns on capital, greater productivity, increases in real output, employment, production. And if you're really worried about it, it's just not going to work out the next minute. You got five years, for God's sakes. And five years is a long time in politics. And by five years, let me tell you, Britain will be right on the top of the growth path of the planet if they brought their tax rate down to 20%. >> Okay? And by the way, at the same time getting rid of all the loopholes that you should do, too. You don't need loopholes at a 20% tax rate. You just don't pay your damn taxes and go on and work. But that's not what they do in Britain. They sit there and oh, let me collect my taxes and let me go after you and beat you up and do all that so I can give the money to people who don't work. That doesn't make sense. Is there is there like a reason as to why there the Europeans and it's not just Great Britain. It's a lot of Western European nations are pursuing a policy of of higher taxes and and u redistribution of wealth. Let's put it that way. Are they following the Scandinavian model here? >> No, it's not a model of any sort. It's just it's virtue signaling. They're all feel very embarrassed by who they are. Oh my god, I want to help the little children. Give them more money. Do it through the government. Not personally, by the They don't contribute to charities, these people. They just make other people contribute to the charities there and it's all virtual sign virtue signaling from these people and because they feel horribly guilty about being in the position they're in. I'm just a I'm just telling you that's what it is. And these people think that they're doing the Lord's work by making poor people stay poor. I don't think that's true. I think you need to try to do all you can to allow poor people to become wealthy and to increase their incomes, not lower their incomes. That's what I think is the right thing to do. >> There does seem to be a rising wealth gap and that is partly due to the fact that asset prices over the last two years have risen tremendously. The wealthy who own assets are wealthier as a result. The people who don't have stagnated in real wealth. People have pointed to this fact and given all sorts of reasons as to why this has happened and then all of course all sorts of prescriptions to how to fix that if we even need to fix that at all. Can we address that first and foremost? Do we need to fix that? >> Fix that. And what we do need to do is asset values go up, which means we need to have more investment, more companies, more output, more production, more employment. There's nothing wrong with with asset values going up. If your home price goes up, all what people's houses prices go up. What are how home builders going to do? They're going to build more. If you want to get cheap homes in this country, David, if you want cheap homes, go to West Virginia and Kentucky. You can buy a home for $25,000 on an acre of land with nothing there. It's a single wide and you can have that, but no one lives in them because they don't want to be there because it's the most depressed area in the world. What you want to do is you want to make it attractive for people to build homes. That's what's called affordability. And if you have high increasing asset values, you have more people wanting to start companies and making profits and doing all the good stuff there. Higher priced homes mean you attract new home builders. Your supply of homes increases and that makes home more affordable. I love what Deantis is doing by getting rid of the property tax in Florida. It's just great. By the way, I'm going to see him in the next couple of weeks. >> Yeah. >> On that. >> You you the LER curve was developed way before the um mainstream acceptance I guess of monetary modern monetary theory MMT uh which you know if I could paraphrase here broadly states that uh sovereign governments can issue currency at will uh and it may or may not even impact inflation. So if you have that scenario when the governments can just print money and according to this theory, inflation may not be directly impacted. Well, we don't need to lower taxes to incentivize more spending. We can just print our way out of a deficit. So the tax rate can actually be even higher. Governments can make more money either way. Right. >> Yeah. But this is a theory is flawed because it has a veil of bond bond illusion. Let me if I can say this. >> Yes. is if you get to buy more goods by not working, someone who works loses those goods. It's just accounting. It's all there is to it. This is the one we went through so detailed before is the transfer theorem. And let me uh let me go through it again with your audience here. Transfer theorem is when you f take from those who have a little bit more and you give to those who have a little bit less. By taking from those who have a little bit more, you reduce their incentives to produce and they will produce a little bit less. You with me? >> Yes. >> If you give to those who have a little bit less, you provide them with an alternative source of income other than working and they too will produce a little bit less. You with me? >> Okay. Yeah. >> The theorem here is really simple. Whenever you redistribute income, you always reduce total income. Period. That's the theorem. I don't give a damn if you're tall, short, old, young, fat, skinny, male, female, whatever the hell you are. That's math. Now, the lema from this theorem, which is so cool, is that, and I'm not going to prove this to you verbally, but the more you redistribute, the greater will be the reduction in total production. That should be pretty obvious. What if somebody makes a claim to you, Dr. Laugher, were the the challenge here is that if I were to take from multi-millionaires and billionaires through maybe a few additional points of extra extra tax, which would be immaterial to them because they're already excessively wealthy. I redistribute that to the less wealthy who then spends more. Wouldn't total output increase because the wealthy isn't going to spend less because they're taxed 2% extra, but the poor might spend more. That's just theory. >> I don't I don't think you're right. If you take from someone and give to someone else, >> the person you take from will spend less, the person you give it to will spend more. That's true. Those two will. >> And the multiplier effect on the person you give the money to will be there. That's true. But the multiplier will also be there from the people from whom you took the goods. >> That multiplier will be there as well. And those two offset each other. What doesn't offset is the incentive effect or the uh or the tax rate effect, the substitution effect of the transfer. This is what I'm focusing on here. If you were able to redistribute income so that everyone came out exactly the same, right? There will be no income whatsoever. Let let me prove that to you. To get everyone to be exactly the same, what you have to do is you have to tax everyone above the average income 100% of the excess. And you have to subsidize everyone below the average income up to the average income. That's the only way you can guarantee everyone comes out the same. >> Yeah. Now, if you actually did that, if you actually taxed everyone above the average income, 100% of the excess, >> and if you actually subsidize everyone below the average income up to the average income, I will stipulate today, counselor, everyone will come out equal at zero income. The only way you can reduce income inequality, the only way you can do it is by making everyone poorer. And the only way you can have exactly equal income in all society is to have everyone earn nothing. That is the only way it happens. So if you want income and if you want income equality, it has to be at zero because if one guy makes a buck more, all of a sudden you got greater income inequality. But if you want jobs for the poor, you want the most ine unequal income you can get. You need the growth in a natural way. You want rich people to produce as much as they possibly can and employ all those low-income people and let them become rich. >> The best form of welfare, as JohnF Kennedy said, is a good highpaying job. >> Well, let let me let me just end on on this note on on this part of the discussion. How would you convince the constituents of, let's say, New York or Los Angeles, Austin, Texas, whatever big city, Chicago, um, left-leaning cities that want higher taxes on the wealthy because here here here here's some facts. Uh, real wages for the bottom income distribution are not rising for a lot of these people. They feel stuck and they feel rightfully angry. And so when you introduce, let's say, I was going to ask you about a flat tax rate, but then those same people would argue, well, why am I paying the same tax rate as a billionaire? They should be paying more. How do you explain to somebody like that that perhaps if you tax the billionaires and multi-millionaires more, everyone is less is worse off? It it is counterintuitive. >> Yeah. If Yeah, I'll answer that in two ways. Two ways if I can. First one is, you know, if you make a thousand times more than I do, you should pay a thousand times more in taxes than I do. That's pure and simp. Everyone understands that. A family understands that you give equal proportions to people. If grandma's sick, the rich one gives more, but not percentage-wise more. Everyone contributes into the family. That's a very natural way that if you make more than I do, you pay more in taxes, but we pay the same percentage amount. That's a really understandable one. The second one is the is the hard lesson to learn. If you think you're going to get the rich people's money, you're stupid and crazy and wrong. They can they have the ways to avoid taxes. They can change the location of their income, the timing of their income, the volume of their income, the composition of their income. They can do that. They have the means to do it. They can hire lawyers, accountants, deferred income specialists, favor grabbers, lobbyists, presidents, congressmen. When you see Obama with five people in the room there, don't think it's five street people explaining to them what it's like being poor. It's five guys from Goldman Sachs who have a new tax dodge that they want to take back to their company. That's just what you're not going to get their money. Period. Now, do you want to destroy every job and still not get their money or would you like to get some of it and have a low rate broad-based flat tax that would be fair and give you a chance to re become one of the rich people? The one thing I found in Britain that is amazing, they're all anti- rich people, okay? Everyone is in Britain, but everyone buys lottery tickets to make the big lottery hit. Everyone wants to be rich, but they want to hate the rich. It's the stupidest thing I've ever seen. Everyone wants to become rich. The question is, how do you provide them with the opportunity to become richer? That's all I want to do is I want to be able to provide the poor with a chance of earning more income. You know, I don't hate rich people. I really love poor people and want them to be able to make a a better living by having less taxes, less burden on them. And you know, going after the rich is going to screw you every single time. >> Let's end on this note, Dr. Le, before I let you go. What's What are you looking forward to next when it comes to economic developments? Uh what's on your calendar that you're watching? It's rumored that um Kevin Hasset might be the the lead candidate for the next vet chair. So, maybe that's one thing, but uh anything else that you're watching that you're looking for? He's a great guy. He's a great guy. Kevin Worsh is a great guy. Kevin Hassets is the president's guy. I mean, really is there. And so, the president decides he wants to make a material difference at the Fed, you know, and he wants someone in there he knows, trusts, and it has to be Kevin Hasset. And Kevin Hasset has all the all the uh bonafide to be a great Fed chairman and to really change the Fed. Why do they have 400 PhD economists, former Larry Larry Summers students all sitting in there earning lots of money? There's been mission creep and all that stuff going on at the Fed. It needs to be taken down badly and brought back under control. That's true. I'm looking at all sorts of other things now. I, as I told you, we're looking at payroll tax rate reductions to use the tariff money there to reduce tax rates on payrolls to reduce income taxes. We have all sorts of openings there and the 501c3s and the tax expenditures there to bring the tax rate down to 15%. And there's all sorts of stuff we're doing in the medical community with prescription drugs, with uh um uh price transparency, with uh tobacco. I mean, you know, we have these things called IQOS, which are heated tobacco sticks, which could save lots and lots of people from horrible diseases who can't quit smoking. And Japan has probably half of the Japanese that smoke who smoke do IOS. They use warm tobacco rather than combustion products. So you we've got a lot of fun stuff coming along there. I could take you through lots of other stuff, but education reform is just huge and really wonderful stuff. And uh and AI AI is the stuff of dreams. So when you look at me, David, we're in for a really good period coming forward. And you just find some of those lefties to debate me and I'll teach them a lesson or two. >> Absolutely. We'll get someone We'll get someone to debate you. We We love you in uh solo interviews, but also debates as well. And uh >> well the debates are much better cuz and the wolf debate was and it was civilized. It was great. He was a fine guy. I like him a lot. I mean he's wrong but he's a good guy. Well that's okay. You wouldn't expect me to argue against a correct position. Do you? >> I'm sure he feels I'm sure the love is mutual. I'm sure he feels the same about you. But I >> think he does. I think he does. We both had the same professor Paul Ban who was the Marxist professor that he and I both had. So we had a lot in common. >> Uh let me you know what? Let me just let me just a end on one final final question. I don't know if anyone's ever asked you this before. Were you ever a Marxist when you were younger? >> I was very much enamored by Marxist ideology under Paul Ban at that time. Now I was a graduate student back then and I thought I really liked him. I liked it. I never was a Keynesian. I never was a socialist. I never believed in redistribution but I could understand the uh the government's ownership of the means of production. you know, uh that I could understand. Uh a as the years have gone on, uh I just think the personal incentives are so out of whack for Marxism that you really need personal there are lots and lots and lots of problems with private enterprise and capitalism. There are lots of problems, but there are a lot more problems with government running the means of production. Well, I I just noticed that there's so many people even in my personal life who were very liberal and, you know, borderline socialist leaning in their views when they were younger and as as they grew older, they became more conservative. >> I wasn't socialist. I was much more Marxist than I was socialist. >> I still believe the person's wage should be judged by productivity. It's just who should own the means of production. >> I see. >> And and some of the areas, I mean, you surely don't want private armies in the US. uh you know you don't want private roads in the middle of a city where you pay tuition you know every four blocks you know uh there are some things that the state should have the means of production and you know when you look at this a lot of the Europeans find it very attractive to always say well the private sector is not doing a good job let's put the government in but you know what do they do when the government's not doing a good job get it out and let the private sector come in that's what they should do but they don't >> thank you so much well there is a role for government control of the means of production but not all of them. Yeah, >> the private sector should control the vast majority of the means of production. Thanks David. Love you. >> Yeah, love you too. Uh well, yeah, as in all things in life, there must be a balance. I think that's the take from Dr. Ler statement. Where can we follow you? Where can we follow your work Dr. L on your show? >> On my show, I mentioned he has a new book. So, people should check out um for sale over in Britain. No, it's Yeah, Prosperity Through Growth. That's in Britain. I don't think it's for sale. I mean, I don't think it's published here, but it's in Britain, but you know, you can find I've got a website. I've got the Laugher Center. Anyone can find me on the internet there, my office stuff, but I don't do emails. I I you know, I don't I have a flip phone. I, you know, I'm a little bit of an I need AI in my brain. I I need to all that stuff. >> Okay, you take care, David. All right, you take care as well. We'll see you next time. Thank you. >> Thank you very much.