Fact Check: July 2013 Laffer Study and Marketplace Fairness Coalition

“New Study By Top Conservative Economist Finds E-Fairness 
Will Spur Economic Growth, Create Jobs” is the title of this press release. 

Will it?  No.  Even if you do believe him, his theories and assumptions.

“In Dr. Laffer’s new study, “Pro-Growth Tax Reform and E-Fairness,” he reports that the 
collection of online sales taxes that are already legally owed and leveling the playing field 
for all retailers, while using additional revenues wisely, would have a profoundly positive 
economic impact in states across the country.”

The Pro-MFA people have been blowing their horns about this study.  And of course, completely, intentionally and misleadingly leaving out that unless states also cut income tax by the same amount, the economic benefit will not be there.    The MFA has no such tax cut provision!

Actually, according to Laffer’s theories, NOT matching these new revenue sources would actually harm  the states’ economies since this new tax receipt would remove discretionary income from consumers.  Standard supply-side economic theory.  Actually pretty much Econ 101.  And of course the snazzy graphs which predict growth when paired with the tax cut are there, but the graphs of what happens when the states just keep the money are conspicuously missing.  Just like the tax cuts will be.

““This study further confirms what job creators and political leaders across the 
country have long been saying which is that flattening the tax code and leveling the 
playing field will spur economic growth,” the Marketplace Fairness Coalition said in a 
statement today.” 

So will the MFC urge the house to mandate the states to lower their taxes as part of the Marketplace Fairness Act?  Otherwise, there is no flattening of the tax code.  There’s no economic growth, and according to Laffer’s own economic beliefs, the opposite of growth with a new tax.  And since MFC claims that 99% of online sellers won’t be affected by the MFA, there will be no leveling of the playing field either since 99% of retailers won’t be collecting tax.

Cognitive Dissonance?

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