In economics, the laffer curve illustrates a theoretical relationship between rates of taxation and the resulting levels of the governments tax revenue. I d like to receive the forbes daily dozen newsletter to get the top 12 headlines every morning. Arthur laffer the father of supplyside economics add to list. As all of the tables are now taken, the maitre d sets up a much smaller table for larry. Files are available under licenses specified on their description page. During the reagan administration, economist arthur laffer. Authors arthur laffer and stephen moore, two of the most. A little laffer curve reality should guide republican tax. With the bush tax cuts due to expire soon and debates about raising top rates further to cut the budget deficit soon to follow, the laffer curve is bound to come up again. Arthur laffer, father of supplyside economics, to receive. The idea of cutting tax rates to spur business comes from the economist behind ronald reagans reaganomics tax cuts, arthur laffer the laffer curve delivers a simple, seemingly obvious message. Stephen moore and arthur laffer, two very talented men, have just completed an incredible book on my economic policies, or, as they call it, trumponomics. Evidence on the highincome laffer curve from six decades of tax reform.
It illustrates the concept of taxable income elasticityi. Some previous discussions include the principle of the laffer curve. Like most economists, he believed that at tax rates above a certain level, tax revenue would fall because high taxes would discourage some people from working and that people would refuse to work at all if they received no income after paying taxes. Guide pratique des concepts et theories economiques 171 finance des marches les marches financiers speculatif.
Laffer is recognized for his tax cutting movement in the 1980s, and known as. Sep 22, 2011 the laffer curve is an economic theory that, legend says, was written up on a napkin at a washington d. Authors arthur laffer, stephen moore and jonathan williams provide an indepth analysis of policies, some of which foster economic growth and prosperity in states like utah, arizona and texas, others of which cause economic malaise in states like california, new york and michigan. Roger middleton the laffer curve represents graphically the principle that tax revenue t does not peak at the highest tax rate available to the fiscal authority but at t, some way short of the maximum, this irrespective of whether it be an individual tax on a good, service or factor income, or a hypothetical aggregate tax system. While discussions of the laffer curve date well before arthur laffer himself,1 empirical evidence has been scant. Supplyside economist arthur laffer is often enlisted to bolster this argument with his analyses purporting to show that states lacking an income tax or estate tax have economies that outperform the rest of the country, and that any state can easily replicate that success by abandoning their income and estate taxes. President coolidge and the laffer curve mises institute. Laffer authored a number of other books with moore, including the end of. The human brain has always been highly tuned towards narratives, whether factual or not, to justify ongoing actions, even such basic actions as spending and investing.
Lawmakers seeking to reduce or eliminate income and estate taxes frequently claim that doing so will result in an economic boom. It is used to illustrate the concept of taxable income elasticity, the idea that a government can. Arthur laffer in a dinn er party in wa shington dc i n 1974 invited by don rumsfeld and d ick cheney w hile discussing president fords win i. An excerpt from chaits book ran in tnr in september, and caught the attention of arthur laffer, the economist who got this whole taxcutspayforthemselves thing going back in 1974. A discussion of the laffer curve named for economist arthur laffer, the laffer curve is one of the few macroeconomic concepts with which the general public has at least a passing familiarity. Rich states, poor states economic opportunity institute. This page was last edited on 23 december 2018, at 04. The laffer curve is a theory that states lower tax rates boost economic growth. Economist arthur laffer discusses why economics is based. Written for a broad audience of laymen and students, the mises daily features a wide variety of topics including everything from the history of the state, to international trade, to drug prohibition, and business cycles. Arthur betz laffer born august 14, 1940 is an american economist who first gained prominence during the reagan administration as a member of reagans economic policy advisory board 198189. In his book, the wealth of nations, adam smith argued that all restrictions on business should be removed. All structured data from the file and property namespaces is available under the creative commons cc0 license.
The black comedy of arthur laffer the black comedy of arthur laffer. The laffer curve is derived from the obvious observation that at both 0% and 100% tax rate, no tax revenue will be collected. Laffer assumes that the governments revenue is a continuous function of the tax rate. The idea that lower tax rates could translate into higher total tax revenue is described by the laffer curve. Other readers will always be interested in your opinion of the books youve read. The laffer curve, named after the economist arthur laffer, is a curve that demonstrates the tradeoff between taxrates and taxrevenues wanniski 1978. Key members of reagans staff prepared an initial actions project. A microfoundation for the laffer curve in a real effort. The truth about supplyside economies, new york, basic books, p. The stated purpose of laffer s article is to show that in country after country, increased government spending acted more like a depressant than a stimulant.
We wish to thank the following for making this publication possible. Larbitraire fiscal libertes 2000 pascal salin download. The laffer curve is an economic theory that, legend says, was written up on a napkin at a washington d. The black comedy of arthur laffer dissent magazine. He argues in pro growth tax reform and efairnessa study released in conjunction with our organizationsclosing the online sales tax loophole is not only necessary to address a. Arthur laffer is one of the undisputed giants of conservative economic thought and the father of supplyside economics. During the reagan administration, economist arthur laffer argued in favor of lowering income tax rates in order to increase tax revenues.
Laffer the story of how the laffer curve got its name begins with a 1978 article by jude wanniski in the public interest entitled, taxes, revenues, and the laffer curve. President ronald reagans initial actions project white house staff, arthur b. Lsl2 walk thru larry laffer dot netlarry laffer dot net. When ronald reagan took office, he was facing an economic downturn similar to the one our country is currently experiencing.
Thus, it was assumed, a reduction of income tax rates would lower tax revenues. Philosophers who agreed, began to write essays that advocated laissezfaire, but, it was a scotchman who made the idea of laissezfaire famous. Laffer is founder and chairman of laffer associates and was a. Well be focusing here on the distinction between the laffer curve as an economic theory promoted by arthur laffer, and the personal politics of laffer, which tbh im not familiar with, so am taking this video as writ. Download the pdf in this document by laffer associates, arthur laffer analyzed data for all texas medicaid dental patients in fiscal year 2011 and finds dental service organizations are providing dental care to some of the poorest, most underserved segments of our. Concentrou seus estudos no setor publico, sendo o pai e forte defensor da corrente da economia pelo lado da oferta e membro da equipe no governo reagan. Whether youve loved the book or not, if you give your honest and detailed thoughts then people will find new books that are right for them.
Almost everything republicans get wrong about the economy started with a cocktail napkin in 1974. In economics, the laffer curve is a representation of the relationship between possible rates of taxation and the resulting levels of government revenue. The idea, popularized by economist arthur laffer and writer jude wanninski in the 1970s and 80s, is simple. The laffer curve was coined by journalist jude wanniski in the 1970s, with wanniski naming the curve after an idea sketched on a napkin in a restaurant by arthur laffer. Arthur laffer, the economist who shaped the theory of supplyside, trickledown economics, will receive the esteemed presidential medal of freedom in june, the white house announced friday.
They have really done a great job in capturing my longheld views and ideas. Do lower tax rates really increase government revenue. The laffer curve is the most famous, nonempirical economic concept of the last fifty years. A passionate, detailed, quantified argument for statelevel tax reform an inquiry into the nature and causes of the wealth of states explains why eliminating or lowering tax burdens at the state level leads to economic growth and wealth creation. The laffer curve revisited for 12 oecd countries article in journal of socioeconomics 345. When the tax rate is zero percent, government will collect nothing from the earnings it taxes. Estimates of private wealth in italy after unification. Wanniski wrote the colorful story about laffer sharing a steak dinner at the two continents restaurant in washington d. Tax rates of zero percent produce no revenue, for obvious reasons. From the 1880s to the outbreak of the first world war a good number of european scholars produced applied economicstatistical works estimating the wealth held by private individuals. Arthur laffer youre embarrassing yourself the market. The latest example is supplyside hero arthur laffer who frankly is embarrassing himself in a recent wall street journal article. It was introduced into english by lord hicks in his wonderful book, value and capital.
The laffer curve is a theory developed by supplyside economist arthur laffer to show the relationship between tax rates and the amount of tax revenue collected by governments. Arthur laffer, american economist who propounded the idea that lowering tax rates could result in higher revenues. We seek to understand how laffer curves differ across countries in the us and the eu14, thereby providing insights into fiscal limits for government spending and the service of sovereign debt. Chapter 4 the theory of laissezfaire digital history. The idea, famously sketched by then usceconomics professor arthur laffer, was. Economist arthur laffer is famous for his laffer curve which illustrates the fact that at a certain point increases in taxes result in a decrease in tax revenue. He showed the relationship between taxes and revenue in the laffer curve. While considered a radical new theory by many, this theory was first advanced 600 years ago by the arab scholar ibn khaldun. The laffer curve and the failure of stimulus spending institute of. A few quotes from our conversation are in my columnand the deadtree. In economics, the laffer curve illustrates a theoretical relationship between rates of taxation. Evidence on the highincome laffer curve from six decades.
Laffer is best known for the laffer curve, an illustration of the theory that there exists some tax rate between 0% and 100% that will result in maximum tax revenue for governments. The laffer curve is a theory developed by supplyside economist arthur laffer to show the relationship between tax rates and the amount of tax. Arthur laffer, american economist who propounded the idea that lowering tax rates. Laffer is an american economist and author who served under former president ronald reagans administration as a member of the economic policy advisory board. This page was last edited on 19 november 2019, at 12. Jun 01, 2004 the story of how the laffer curve got its name begins with a 1978 article by jude wanniski in the public interest entitled, taxes, revenues, and the laffer curve. It underpins supplyside economics, reaganomics, and the tea partys economic policies. Laffer is the founder and chairman of laffer associates and laffer investments, and many publications have named him the father of supplyside economics. There are only two points on the laffer curve0% and 100%. Laffer is the founder and chairman of laffer associates, an institutional economic research and consulting firm, as well as laffer investments, an institutional investment management firm utilizing diverse. Legend has it that supplyside economist arthur laffer sketched the curve on a cocktail napkin at a washington restaurant in 1974, showing it to thenford administration officials donald rumsfeld and dick cheney. At points b and d, the electorate desires more government goods and services and wishes to pay the higher rates producing the revenues consistent with e.
E00, e03, e30, g02, n1 abstract this address considers the epidemiology of narratives relevant to economic fluctuations. The stated purpose of laffers article is to show that in country after country, increased government spending acted more like a depressant than a stimulant. Sign up for our newsletter by march 31 to receive a full pdf when the issue launches. An inquiry into the nature and causes of the wealth of. Five critiques of arthur laffers supplyside model show. The laffer curve is associated with supplyside economics, where its use in debates over rates of taxation has also been controversial. Supplyside economist arthur laffer is often enlisted to bolster this argument with his analyses purporting to show that states lacking an income tax or estate tax have economies that outperform the rest of the country, and that any state can easily replicate that. However, in some theoretical models, the laffer curve can be discontinuous, leading to an inability to devise a revenuemaximizing tax rate solution. The mises daily articles are short and relevant and written from the perspective of an unfettered free market and austrian economics.
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