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

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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.