Laffer curve

Khaldun-Laffer CurveTaxable income elasticityelasticity of taxable incomeLafferLaffer effectmacroeconomic feedback effects
In economics, the Laffer curve illustrates a theoretical relationship between rates of taxation and the resulting levels of government revenue.wikipedia
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Arthur Laffer

Art LafferArthur B. LafferLaffer Associates
The Laffer curve was popularized in the United States with policymakers following an afternoon meeting with Ford Administration officials Dick Cheney and Donald Rumsfeld in 1974, in which Arthur Laffer reportedly sketched the curve on a napkin to illustrate his argument. The term "Laffer curve" was reportedly coined by Jude Wanniski (a writer for The Wall Street Journal) after a 1974 dinner meeting at the Two Continents Restaurant in the Washington Hotel with Arthur Laffer, Wanniski, Dick Cheney, Donald Rumsfeld, and his deputy press secretary Grace-Marie Arnett.
Laffer is best known for the Laffer curve, an illustration of the concept that there exists some tax rate between 0% and 100% that will result in maximum tax revenue for government.

Jude Wanniski

Wanniski's Two Santa Claus Theory
The term "Laffer curve" was coined by Jude Wanniski, who was also present at the meeting. The term "Laffer curve" was reportedly coined by Jude Wanniski (a writer for The Wall Street Journal) after a 1974 dinner meeting at the Two Continents Restaurant in the Washington Hotel with Arthur Laffer, Wanniski, Dick Cheney, Donald Rumsfeld, and his deputy press secretary Grace-Marie Arnett.
Wanniski was instrumental in popularizing the ideas of lower tax rates embodied in the "Laffer Curve" and was present in 1974 when Arthur Laffer drew the curve on the famous napkin for Dick Cheney and Donald Rumsfeld.

Muqaddimah

MuqaddimaMuqadimmahAl-Muqaddimah
Laffer does not claim to have invented the concept; he notes that there are antecedents, including in the Muqaddimah by 14th-century Tunisian scholar Ibn Khaldun, and in the writings of John Maynard Keynes.
Ibn Khaldun introduced the concept now popularly known as the Laffer curve, that increases in tax rates initially increase tax revenues, but eventually the increases in tax rates cause a decrease in tax revenues.

Tax Cuts and Jobs Act of 2017

Tax Cuts and Jobs Act2017 Republican tax planRepublican tax legislation
In 2019, other researchers revisited the macroeconomic and budgetary response to the stylized 10% reduction in statutory ordinary income tax rates, but from the levels set by P.L. 115-97.
The CBO estimates that implementing the Act would add an estimated $2.289trillion to the national debt over ten years, or about $1.891trillion after taking into account macroeconomic feedback effects, in addition to the $9.8trillion increase forecast under the current policy baseline and existing $20trillion national debt.

The Wall Street Journal

Wall Street JournalWSJWall St. Journal
The term "Laffer curve" was reportedly coined by Jude Wanniski (a writer for The Wall Street Journal) after a 1974 dinner meeting at the Two Continents Restaurant in the Washington Hotel with Arthur Laffer, Wanniski, Dick Cheney, Donald Rumsfeld, and his deputy press secretary Grace-Marie Arnett.
Under the editorship of Robert Bartley, it expounded at length on economic concepts such as the Laffer curve, and how a decrease in certain marginal tax rates and the capital gains tax could allegedly increase overall tax revenue by generating more economic activity.

Ibn Khaldun

Ibn KhaldounIbn Khaldūna fourteenth century Muslim historian
Laffer does not claim to have invented the concept; he notes that there are antecedents, including in the Muqaddimah by 14th-century Tunisian scholar Ibn Khaldun, and in the writings of John Maynard Keynes. The basic concept was not new; Laffer himself notes antecedents in the writings of the 14th-century social philosopher Ibn Khaldun and others.
Arthur Laffer, for whom the Laffer curve is named, acknowledged that Ibn Khaldun's ideas, as well as others, precede his own work on that curve.

Tax rate

marginal tax ratetax rateseffective tax rate
In economics, the Laffer curve illustrates a theoretical relationship between rates of taxation and the resulting levels of government revenue.
This is the basis of the Laffer curve theory, which theorizes that population-wide taxable income decreases as a function of the marginal tax rate, making net governmental tax revenues decrease beyond a certain taxation point.

Reaganomics

marginalizationvoodoo economicsReagan
The Laffer curve and supply-side economics inspired Reaganomics and the Kemp-Roth Tax Cut of 1981.
The contention of the proponents, that the tax rate cuts would more than cover any increases in federal debt, was influenced by a theoretical taxation model based on the elasticity of tax rates, known as the Laffer curve.

Tax

taxationtaxeslevy
In economics, the Laffer curve illustrates a theoretical relationship between rates of taxation and the resulting levels of government revenue.
The Laffer curve depicts the amount of government revenue as a function of the rate of taxation.

Optimal tax

optimal taxationoptimal corrective taxesoptimal tax theory
The revenue maximizing tax rate should not be confused with the optimal tax rate, which economists use to describe tax rates in a tax system that raises a given amount of revenue with the least distortions to the economy.

Supply-side economics

supply-sidesupply sidesupply side economics
The Laffer curve and supply-side economics inspired Reaganomics and the Kemp-Roth Tax Cut of 1981.
The Laffer curve, a theoretical relationship between rates of taxation and government revenue which suggests that lower tax rates when the tax level is too high will actually boost government revenue because of higher economic growth, is one of the main theoretical constructs of supply-side economics.

Flat tax

flat income taxflatflat rate
Laffer has presented the examples of Russia and the Baltic states, which instituted a flat tax with rates lower than 35% around the same time that their economies started growing.

Kansas experiment

aggressive personal and corporate income tax cuts in Kansas in 2012large-scale tax cut legislation that Kansas Republicans enacted in 2012signed into law
More recently, based on Laffer curve arguments, Kansas Governor Sam Brownback greatly reduced state tax rates in 2012 in what has been called the Kansas experiment.
* Laffer curve

Economics

economiceconomisteconomic theory
In economics, the Laffer curve illustrates a theoretical relationship between rates of taxation and the resulting levels of government revenue.

Government revenue

revenuerevenuesgovernment revenues
In economics, the Laffer curve illustrates a theoretical relationship between rates of taxation and the resulting levels of government revenue.

Taxable income

exemptionincomeIRC §63
The curve illustrates the concept of taxable income elasticity – i.e., taxable income changes in response to changes in the rate of taxation.

Rolle's theorem

Under the assumption that the revenue is a continuous function of the rate of taxation, the maximum illustrated by the Laffer curve is a result of Rolle's theorem, which is a standard result in calculus.

Conservatism in the United States

conservativeconservativesConservatism
In the United States, conservatives have used the Laffer Curve to argue that lower taxes may increase tax revenue.

The New Palgrave Dictionary of Economics

The New Palgrave: A Dictionary of EconomicsNew Palgrave: A Dictionary of Economics[1987
The New Palgrave Dictionary of Economics reports that estimates of revenue-maximizing tax rates have varied widely, with a mid-range of around 70%.

Mid-range

Midrangemidsummaryhalf-range
The New Palgrave Dictionary of Economics reports that estimates of revenue-maximizing tax rates have varied widely, with a mid-range of around 70%.

Gerald Ford

Gerald R. FordFordGerald R. Ford, Jr.
The Laffer curve was popularized in the United States with policymakers following an afternoon meeting with Ford Administration officials Dick Cheney and Donald Rumsfeld in 1974, in which Arthur Laffer reportedly sketched the curve on a napkin to illustrate his argument.

Dick Cheney

CheneyRichard B. CheneyRichard Cheney
The Laffer curve was popularized in the United States with policymakers following an afternoon meeting with Ford Administration officials Dick Cheney and Donald Rumsfeld in 1974, in which Arthur Laffer reportedly sketched the curve on a napkin to illustrate his argument. The term "Laffer curve" was reportedly coined by Jude Wanniski (a writer for The Wall Street Journal) after a 1974 dinner meeting at the Two Continents Restaurant in the Washington Hotel with Arthur Laffer, Wanniski, Dick Cheney, Donald Rumsfeld, and his deputy press secretary Grace-Marie Arnett.