As widely anticipated, Dr. Arthur Laffer — keynote speaker at the 55th annual joint meeting of three Oklahoma City civic clubs (Kiwanis, Lions and Rotary) – on Tuesday (November 29) delivered a forceful and occasionally humorous exposition defending free markets and free people.
Laffer also offered a précis of points made in a new analysis from the Oklahoma Council of Public Affairs (OCPA), in cooperation with Arduin, Laffer & Moore Econometrics (ALME). The study outlines a proposal to put the state on a 10-year glide path to elimination of the state income tax.
Preston Doerflinger, Cabinet Secretary of Finance in the administration of Governor Mary Fallin, told CapitolBeatOK he has studied the OCPA-ALME paper. Asked for a succinct reaction, he said, “Let’s get it on.”
While his content was serious, Laffer included a few quips about his Yale University (class of 1962) classmate, former U.S. Senator and now-University of Oklahoma President David Boren. Laffer reflected that “even then” he and Boren were “the tubbiest guys in our class.”
In a more serious vein, he recalled his work with Boren and others in the U.S. Senate to advance capital gains tax reductions and other pro-market tax reforms.
Professor Laffer pointed to a range of evidence that instruct him that “no matter how you slice it,” states without income taxes perform better than those with the levy. He said removal of the income tax would yield “an immediate boon for Oklahoma.”
As for the national picture, Laffer asserted, “In my view, we don’t have a debt problem, we have a spending problem.” Laffer made clear he clings to the view held by the late Milton Friedman – an acclaimed economist who, like Laffer, is often assigned to the “Chicago school” (University of Chicago) – that “Government spending is taxation.”
Stressing his comments should not be considered partisan or even ideological, the 71-year-old Laffer said he has devoted his career in the study of economics to promotion of policies that work. Advancing lower taxation and smaller government “is not political, and not partisan. It’s good economics.”
He noted that President John F. Kennedy, a Democrat, scaled back significantly the draconian income tax rates that had been imposed during the Great Depression. Nearly two decades later, Ronald Reagan built on the Kennedy model to bring income tax levies still lower, triggering an economic boom that lasted for nearly a decade.
On the flip side, to make his point, Laffer made clear his disdain for the spending policies of both the current president, Barack Obama, and his predecessor, George W. Bush. Laffer contended, “The reason the American can economy is in bad shape today is bad policy, not bad luck.”
Laffer reported he twice voted for Bill Clinton, and complimented the former president for lowering government spending, support of free trade, senior tax cuts and other pro-market reforms.
Among current governors, he had good words for three Republicans – Mitch Daniels of Indiana, Scott Walker of Wisconsin, and Chris Christie of New Jersey – and at least one Democrat, Anthony Cuomo of New York. He also said that Jerry Brown, now governor of his former home state (California) has taken wise steps in terms of restraints on state government employee pension benefits.
As detailed in the study he co-authored for OCPA, Dr. Laffer predicted (in response to a question at the luncheon) that the Sooner State would see higher sales tax receipts due to greater consumer spending as income tax rates come down.
He encouraged policymakers to be bold, and to think of their children and grandchildren. Public policy should “make it more attractive for firms to hire, and for workers to work.”
Laffer observed, “Poor people can’t spend themselves into prosperity.”
Larkin Warner, an emeritus professor of economics from Oklahoma State University, gave Dr. Laffer a warm introduction, saying he had always considered him “primarily an economic educator, teaching us all how excessive taxation can work to the detriment of all.”
Warner also teased Laffer for recently being described in a Wall Street Journal article as “a conservative tax icon.” Warner noted Laffer’s significant impact on public policy during the presidency of Ronald Reagan and since.
Laffer’s speech to the Rotary, Kiwanis and Lions clubs came in the ballroom atop the downtown Chase Building, in the packed-full ballroom of the Petroleum Club.
The OCPA-sponsored study was prepared in collaboration with Arduin, Laffer & Moore Econometrics, of which Dr. Laffer is a co-founder.
OCPA, operating from offices on Lincoln Boulevard in Oklahoma City, is described on its website and in press releases as “a nonprofit, nonpartisan think tank which formulates public policy research and analysis consistent with the principles of free enterprise, limited government, and individual initiative.”