The Laffer Curve and Supply-Side Economics
Celebrating the 50th anniversary of the Laffer Curve, a concept that suggests cutting tax rates can increase revenue and economic growth. Arthur Laffer's visualization on a napkin in 1974 sparked a school of thought known as supply-side economics. The idea was embraced by Ronald Reagan and continues to influence policies today, including President Trump's pro-growth initiatives.
Key Points
- Laffer Curve concept suggests an optimum tax rate for maximizing revenue and growth
- Supply-side economics focuses on productivity and abundance by cutting taxes and regulations
Pros
- Cutting tax rates can potentially increase revenue and stimulate economic growth
- Influenced policies that led to economic booms in the past
Cons
- Some critics argue that tax cuts benefit the wealthy more than others