According to a 2012 IGM panel (cf. reference below), most experts believe that a federal income tax cut would lead to a higher GDP in five years, ceteris paribus. Is this effect purely Keynesian, and based on a presumption that the U.S. was still recovering from the recession and that greater fiscal stimulus was called for, or does it truly reflect a belief among the majority of mainstream economists that the U.S. federal tax regime is sitting on the wrong side of the Laffer curve as the title indicates?
To be the wrong side of the Laffer curve would require there to be another lower tax rate which produced the same or greater tax revenues
That is not what was being said:
- Question A addressed the sign of the impact on GDP, not on tax revenues;
- Question B addressed the sign of the impact on tax revenues; nobody agreed and the large majority disagreed
so the consensus was that lower tax rates would lead to slightly higher GDP and slightly lower tax revenues
This is what usually happens when you are the correct side of the Laffer curve, and allows political debate about issues such as government deficits, public and private expenditure, and stimulating growth and inflation. Being the wrong side of the Laffer curve would instead lead to Pareto optimality issues, but that is not the case here