Laffer: Taxes should be No. 1

SARASOTA — What's the single most important thing the government can do to help the economy rebound? In a discussion with local media today, Dr. Arthur Laffer says it's something he's been preaching for years: Institute a flat tax system.

In a talk hosted by Caldwell Trust Co., Laffer shared his insights on the economy, as well as what the government should do to help the U.S. recover from the recession. Laffer is known as the father of supply-side economics, and has been an economic adviser in Washington, D.C., since the 1970s.

Laffer opined on everything from defense and deficit spending to monetary supply and inflation, but he says the top thing the U.S. should do to grow its economy is change its tax code. He advocates a flat tax rate of 12% that eliminates deductions, with the exception of charitable contributions and mortgage interest deductions.

He says this would not only create a more sound method of generating revenues, but also ease the burden and cost of complying with the current tax system. He says the latter costs Americans 30 cents for every $1 they pay in taxes. “Tax codes are the most important for growth,” Laffer says.

Laffer, who has worked with and been friends with Roland Caldwell, founder of Caldwell Trust Co., for more than four decades, also told the group not to expect anything until after the presidential election in November. He said he does believe Obama's challenger will win.

“All elections are referenda on the incumbents,” he said. “So when you pull the curtain, the question you have to ask yourself is: Do you want four more years of what we've had?”

Caldwell Trust Co. is a Venice-based financial company that manages more than $500 million in assets. Laffer is founder and chairman of Laffer Associates, an economic research and consulting firm.