This is a rush transcript from "The Journal Editorial Report," April 11, 2009. This copy may not be in its final form and may be updated.
PAUL GIGOT, FOX HOST: Up next on "The Journal Editorial Report," as April 15th nears, we'll take a look how high your taxes could go. And what it will do to an economic recovery.
Plus, run away, prosecutors. Ted Stevens is just the latest victim of abuse of attorneys out to make a name for themselves.
And just in time for Easter, a new survey has some declaring the end of Christian America.
"The Journal Editorial Report" begins right now.
Welcome to the "Journal Editorial Report." I'm Paul Gigot.
Well, as April 15th nears, taxpayers across the country are struggling to meet the filing deadline and wondering how much higher their taxes can possibly go. Economists, Arthur Laffer is here to tell us. He's the co- author of the book "The End of Prosperity: How Higher Taxes will Doom the Economy if We Let it Happen."
Arthur, thanks for being here. Great to have you here again.
ARTHUR LAFFER, ECONOMIST: A pleasure to be with you, Paul.
GIGOT: You were one of the architects of the Reagan tax cuts nearly 20 years ago now. But that era seems to be ending at least in terms of tax cuts. Are we entering a new era of much higher taxes?
LAFFER: I think we really are. With spending this administration has done and the promises of not letting the Bush tax cuts continue, I think we're entering a period of much higher spending — taxes.
GIGOT: How are they going to go? It's now 35 percent marginal income tax rates. Under Clinton it was up to 39.6 and that's how high President Obama says he's willing to let it go. In the past, as you know, they were as high as 70 percent before Reagan came into office, and 90 percent under Roosevelt. How high are they going to go?
LAFFER: That's right. I don't know how high they are going to go. I bet they'll go a lot, lot higher than 40 percent. I think they're going to extend the payroll tax. I mean, when you look at the income tax, Paul, I mean, you really can't collect much money from upper-income people. They know how to get around taxes. So if you want to raise revenues, you've got to do it in low-level, broad-based taxes. That includes the income tax. That includes the payroll tax. That includes sales taxes. So would I guess they're really going to go after these the low-level, high-revenue based taxes in the next four or five years.
GIGOT: Wait a minute. Wait a minute. President Obama says nobody under $250,000 is going to pay a dime of new taxes. What you're saying, if I hear you correctly, is that that's where the money is. You've got to go at it. What's that going to do to his political popularity if he really does that?
LAFFER: Well, I have no idea. The political popularity does not seem to be based on economics, at least not of the economics I know about.
GIGOT: It's early days. It's still early days.
LAFFER: It is early days, but he's very popular, but he has proposed the cap and trade, which is estimated to raise $650 billion.
GIGOT: That's a tax on carbon energy.
LAFFER: Yes, carbon energy, but paid by everyone, low-income people. It's a tax like any other tax. My guess, in the next three or four years, you'll see some very major high-revenue taxes and that cannot be done at the high end because those people can get away from it.