Is the WSJ Misusing the Laffer Curve with Simplistic Data Analysis?

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The discussion critiques the Wall Street Journal's (WSJ) application of the Laffer Curve, highlighting a flawed linear regression analysis that suggests tax revenues drop to zero at a corporate tax rate of approximately 33%. Participants express skepticism regarding the statistical methods employed, humorously suggesting that MS Paint may have been used for data visualization. The conversation underscores the importance of proper statistical analysis in economic discussions, particularly in relation to supply-side economics.

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siddharth
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Take a look at http://online.wsj.com/article_email/SB118428874152665452-lMyQjAxMDE3ODE0MzIxODM4Wj.html" on the WSJ, and especially the graph.

Somebody has slept through a linear regression class :smile: :smile:

(via http://cosmicvariance.com/2007/07/13/the-best-curve-fitting-ever/" and )
Among other features, we note with amusement that the plotted curve implies that tax revenues hit zero at a corporate tax rate of about 33%, and become dramatically negative thereafter. As of this writing, it is unclear what advanced statistical software package was used to fit the Laffer Curve to the data; the smart money seems to be on MS Paint.
 
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That is pretty sad. Even though I may not agree with certain sentiments they say about supply side economics, they have an excellent point about this idiocy. Do you think these people know what an outlier is?

Is there a coincidence that the curve is called the "Laffer" curve? I'm laughing.