The man most despised by big-government, Keynesian disciples for arguing that lower taxes and lower government spending will spur economic growth is coming to Indianapolis next week, with a cautionary tale for the states.
Arthur Laffer, President Ronald Reagan’s go-to guy for supply-side economic theory, will address a national gathering of accountants held by Carmel-based newsletter “Inside Public Accounting,” Nov. 4-6 at the downtown Conrad Indianapolis.
Laffer, 73, is often called the father of supply-side economics. His Nov. 6 address will focus on contrasting tax and fiscal policies of California and Texas and their very different economic results.
He’s long produced research asserting states without personal income tax have markedly outperformed those with such taxes.
Texas has no personal income tax, while California has 10.3-percent income tax rate. Over a 10-year period ending in 2010, Texas trounced California in gross state product, personal income and employment growth. It also had more in-migration—people moving there from other parts of the country.
“You cannot tax your way into prosperity,” said Laffer, the founder and chairman of Nashville, Tenn.-based Laffer Associates, an institutional economic research and consulting firm.
Laffer and his economic theories have been rediscovered in the wake of arguably unsuccessful attempts by the Obama administration to reinvigorate the economy with rounds of stimulus programs and tax hikes.
Recently, in a column in the British conservative magazine The Spectator, Laffer said the more than $3 trillion in government spending aimed at reviving the economy after the 2008 financial crisis was “an abject failure.” He has argued that Washington policies have little to show as far as improving employment or economic growth, and in fact prolonged the recovery.
“The last few years have delivered a powerful refutation of Keynesian economics, because the American economy has performed better in an era of downsizing government that it did during the wild spending ride of 2008-11,” he told The Spectator.
Indiana is one of those states with a personal income tax, although it probably is “the least offensive,” when it comes to rates and deleterious effects, said Laffer, a friend of former Gov. Mitch Daniels.
He contrasts Indiana’s economy to that of Michigan, “a tragedy on wheels,” whose auto industry challenges were made worse by high tax rates and government policies, he said.
“You have a very bright future in Indiana," he said.
Laffer’s appearance is to give accounting firms more perspective on how to help their clients deal with fiscal and tax policy, said Michael Platt, principal of Carmel-based The Platt Group, which publishes Inside Public Accounting.
Accounting firms themselves are dealing with challenges ranging from retirements of experienced accountants to pressures to merge to gain the heft to service more and larger clients.
Inside Public Accounting also conducts a national benchmarking report and recognizes firms that have excelled in the industry. Among those to be honored at this year’s symposium is locally based Katz Sapper & Miller.
The symposium is expected to draw a number of guests from Top 100 accounting firms.