The Wall Street Journal-20080205-What Is the Point of Tax Policy- Revenue or Social Engineering-

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What Is the Point of Tax Policy: Revenue or Social Engineering?

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James Glickson's letter to the editor (Jan. 29), responding to Arthur Laffer's "The Tax Threat to Prosperity" (Jan. 25), provides a stunningly transparent example of liberal-think with regard to the true purpose of taxation. He discounts completely the fact that lower tax rates lead to higher tax revenues and a higher proportion of the revenues coming from high earners. Instead, he prefers to focus on and criticize the fact that high earners earned more under the regime of lower tax rates.

Liberal-think concept number one is that the purpose of taxation is to severely punish the unfairly productive rather than to simply raise the funds needed by the government to provide essential services.

When faced with the choice between raising more tax money (while permitting a few individuals to become more wealthy), and the possibility of inflicting pain on the productive among us (even if it results in lower tax revenue), liberals always choose the latter. Schadenfreude rules.

Curtis H. Laub, M.D.

Meadville, Pa.

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James Glickson gives voice to the reaction many liberals have to supply-side economics, as detailed by Arthur Laffer. He complains that the only reason that the top 1% of taxpayers have been paying more taxes is that they are earning more.

To understand his point of view one must accept that people who pit the poor against the wealthy do not subscribe to the old axiom that "a rising tide raises all boats." They truly want to hurt top income earners. They support higher taxes not because they increase revenues, but because they punish the well-off. Misguided as it may be, class envy is a strong political motivation.

Richard E. Herod

Knoxville, Tenn.

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Mr. Glickson takes Mr. Laffer to task for his selective use of statistics, when Mr. Laffer pointed out that in 1981 the top 1% of income earners paid 17.58% of all federal income taxes versus 39.58% in 2005. Mr. Glickson counters that while that is true, in 1981 the top 1% of income earners accounted for 10% of all income, while in 2005 that figure was 20%. Apparently, in Mr. Glickson's mind, the higher share of income more than offsets the higher proportion of taxes that were paid after the Bush tax cuts.

A brief session with a calculator, however, supports Mr. Laffer's case. In 1981 the top 1% of income earners paid 1.75 times their proportion of income (10%) in taxes (17.58%), while in 2005 they paid 1.95 times their proportion of income (20%) in taxes (39.58%). It appears, that anyway you cut it, the top 1% have taken on more of the tax burden, even while the tax rate has gone down.

James Heimer

Houston

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The Journal does a yeoman's job in evangelizing the Laffer Curve and supply-side economics so this correction might seem like nit picking. In "A Supply-Side World" (Review & Outlook, Jan. 7) you write that Prime Minister Jose Luis Rodriguez Zapatero is driving Spain to join "the European march down the Laffer Curve on taxes." What you mean to say is he is driving Spain up the Laffer Curve towards the higher tax revenues that accrue to those states who lower their tax rates.

While the curve is elegant in its simplicity, it is counterintuitive to the uninformed, including several of our current presidential candidates. Perhaps a diagram is in order.

Joseph Baylock

Burlingame, Calif.