Alan Reynolds suggests:
Aside from that odd remark about what some nameless supply-siders like to claim, Mr. Mankiw simply restated what real supply-siders did claim. He emphasized that higher (marginal) tax rates reduce work effort and cause other inefficient distortions. He added that higher tax rates also reduce the tax base: People respond to higher tax rates by taking it easy or figuring out ways to report less taxable income. This used to be called “the Laffer Curve” but now goes by the more respectable name of “taxable income elasticity.”
I’d be fine with this suggestion – just so we are talking about fiscally neutral changes in fiscal policy. I trust Mr. Reynolds also realizes what Greg Mankiw and I tend to agree on – there is indeed a crowding-out effect when certain politicians (say Ronald Reagan or George W. Bush) try to promise a free lunch where one can cut taxes without cutting government spending. Mr. Reynolds continues with something that is simply not true:
No economist ever claimed all taxes are so distortionary that increasing any tax rate would reduce revenue. Art Laffer never said that. Bob Mundell never said that. Larry Lindsey, Larry Kudlow, Paul Craig Roberts, Steve Entin and Bruce Bartlett never said that. I never said that.
Maybe Mundell, Bartlett, or Reyonlds never said there was a free lunch. I don’t know Steven Entin but I do know Lawrence Kudlow and Art Laffer have often implied a free lunch. Reynolds may grow weary of people accusing him of practicing free lunch economics, but I grow weary of the Lafferites one day saying there is a free lunch and then the next day denying what they just said.