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Chattanooga councilman Darrin Ledford speaks with Economist Arthur Laffer Wednesday, Aug. 23, 2017, after the annual Chattanooga Chamber of Commerce Meeting at the Chattanooga Convention Center. Laffer was the keynote speaker during the event.

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Economist tells Chamber of Commerce new prosperity is coming

Former Reagan administration economist Arthur Laffer said in Chattanooga on Wednesday that he foresees both future tax cuts and a repeal of Obamacare as helping lead to new prosperity.

"I've been to this barbecue before," he said at the Chattanooga Area Chamber of Commerce's annual meeting. "Sooner or later, economics will come into play."

The so-called "father of supply-side economics" also said he expects that "the nastiness" going on in Washington, D.C., involving President Donald Trump and Congress will end.

"That will disappear," said the Stanford University-trained economist. "This division is so unpleasant. But there's nothing you can do about it. You need a definitive election — one that shuts one side down. Trump isn't really yet considered the leader of the Republican Party."

Laffer recalled that after Ronald Reagan was elected president, some called him "an amiable dunce" or a "California cowboy."

But, he said, while there were questions in 1981 about how to get a tax bill passed, it happened in 1986.

"It led to huge prosperity for a generation, and all the Democrats voted for it except three [in the Senate,]" Laffer said, citing yes votes that included Chuck Schumer, Barbara Boxer, and Harry Reid.

He said that while the environment is different in Washington, D.C., today, there hasn't been "that definitive election victory" such as Reagan received when he won 49 states in topping Democrat Walter Mondale.

Laffer, who now lives in Nashville, said he picked Trump's presidential election victory last year. He termed the cutting of regulations that's taken place since then "really positive."

Dropping corporate tax rates will lead to "enormous economic growth," said Laffer, and it will reduce the incentive that corporate giants such as General Electric and ExxonMobile have to go to great lengths to evade paying taxes.

He said a 35 percent tax rate is "an incentive for tax evasion."

Laffer lauded Tennessee's fiscal stability, saying that the "dream is to make America look like Tennessee. This state is the miracle state."

Speaking to more than 1,000 people at the annual meeting, the 77-year-old economist said that Tennessee has no earned income tax and it's getting rid of the Hall tax on interest and dividends, Property taxes are low and while it has a high sales tax, there are not many exemptions, he said.

Also, the state has a $2 billion surplus, Laffer said, additionally citing improvements in reading and math scores among students.

He mentioned getting rid of the state's franchise tax within the next four years, and he'd like to see a limit on property tax rates "to keep our No. 1 position."

Meanwhile, the Chamber was cited for its best in the nation recognition last month by the Association of Chamber of Commerce Executives.

Chamber CEO Bill Kilbride mentioned community leaders, stakeholders and others "for supporting our work."

Also, U.S. Rep. Chuck Fleischmann, R-Tenn., was presented with the Spirit of Enterprise Award by the U.S. Chamber of Commerce for his voting record.

Larry Buie of Chattanooga Gas Co., the Chamber's new board chairman, said the business group plans to continue to focus on improving education and the area's workforce.

Chattanooga Mayor Andy Berke said the city's next step is to "make sure everybody gets a piece of the pie."

Hamilton County Mayor Jim Coppinger said that "great economic development goes hand in hand with education."

Contact Mike Pare at mpare@timesfreepress.com or 423-757-6318.

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