- Former Trump advisor Larry Kudlow attacked Joe Biden’s plans to tax wealthy Americans more.
- Kudlow claimed that cutting taxes on the rich would raise government tax revenues.
- The economic theory, known as the Laffer Curve, has long been criticized.
- See more stories on Insider’s business page.
Larry Kudlow, an economics advisor to former President Donald Trump, claimed that the way to increase the amount of tax wealthy people pay is to cut their taxes.
In a Monday night interview with Fox News’ “The Ingraham Angle,” Kudlow addressed reports that President Joe Biden was considering the first federal tax increases in 30 years to pay for several expensive bills to help secure US economic recovery after the COVID-19 pandemic.
In the interview Kudlow contrasted Biden’s tax plans with the 2017 Trump administration tax cuts the new administration is now seeking to undo.
Kudlow, who served as the director of the National Economics Council under Trump, claimed that the Trump administration’s cuts had primarily benefitted people earning “the middle income and the lower-middle income.”
“This business about getting them to pay their fair share, the way to get upper-income people to pay more in taxes is to lower their tax rate. Not only will they have investment incentives, they will also have no tax avoidance,” Kudlow said.
“They never tell you that, but the evidence is very clear,” he added.
There has long been debate between Republicans and Democrats over whether rising taxes boosts or damages the economy.
Kudlow was apparently drawing on the research of his mentor Art Laffer, whose theories have long been a major influence on Republicans.
Laffer had advised the Trump administration on its tax cuts, and Trump in 2017 awarded him the Presidential Medal of Freedom, the highest award that can be bestowed to a US civilian.
Under Laffer’s so-called “supply-side economics” theories, reducing taxes boosts the economy, thus leading to higher tax revenues overall. It’s an hypothesis known as the “Laffer Curve.”
Democrats have long criticized the theory, claiming that boosts in tax revenues pledged by Laffer and his followers have repeatedly failed to materialize, damaging government finances and exacerbating inequality.
Under Biden’s tax plan, corporations would see their taxes increased alongside households earning more than $400,000 a year. The plan would also increase capital-gains tax.