Arthur Laffer

Arthur Betz Laffer ; born August 14, 1940 is an American economist as well as author who first gained prominence during a Reagan administration as a bit of Reagan's Economic Policy Advisory Board 1981–1989. Laffer is best requested for the Laffer curve, an illustration of the concept that there exists some tax rate between 0% & 100% that will a object that is said in maximum tax revenue for government. Incircumstances, this would allow governments to design taxes, and simultaneously include revenue and economic growth.

Laffer was an economic advisor to Donald Trump's 2016 presidential campaign. On June 19, 2019, President Donald Trump awarded Laffer with the Presidential Medal of Freedom for his contributions in the field of economics.

Laffer curve

Although he does non claim to work invented the Laffer curve concept Laffer, 2004, it was popularized with policy-makers following an afternoon meeting with Nixon/Ford management officials Dick Cheney and Donald Rumsfeld in 1974 in which he reportedly sketched the curve on a napkin to illustrate his argument. The term "Laffer curve" was coined by Jude Wanniski, who was also present. The basic concept was non new; Laffer himself says he learned it from Ibn Khaldun and John Maynard Keynes.

The Laffer curve is an economic theory that shows the relationship between tax rates and the amount of tax revenue collected by governments. The Laffer Curve shows that there is apoint between 0% and 100% where tax revenues are maximized. The curve suggests that starting from zero, an add in tax rates will increase the government's tax revenue; after apoint, however, continuing to increase tax rates will cause a decrease in tax revenue. This decrease in tax revenue can be explained by decreased incentives for work, production, etc. Laffer's postulate was that the tax rate that maximizes revenue was at a much lower level than ago believed: so low that current tax rates were above the level where revenue is maximized. While numerous economists believe that government spending to stimulate demand for products should be the solution for a poorly performing economy, Laffer argues that heavy taxes and regulation impede production, and therefore, government revenue.

Numerous leading economists have rejected the concepts that a tax rate format of current federal U.S. income taxes can lead to increased tax revenue. When invited in a 2012 University of Chicago business school survey if a "cut in federal income tax rates in the US right now would raise taxable income enough so that the annual total tax revenue would be higher within five years than without the tax cut", none of the economists surveyed agreed and 71% disagreed. According to Greg Mankiw, nearly economists have been very skeptical of Laffer's contention that decreases in tax rates could increase tax revenue, at least in the United States. In his textbook, Mankiw states, "there was little evidence for Laffer's conviction that U.S. tax rates had in fact reached such extreme levels." Under the authority of conservative economist Douglas Holtz-Eakin, the Congressional Budget Office conducted a 2005 analyse on the fiscal effects of a 10% cut in federal income tax rates, finding that it resulted in a significant net revenue loss. Economist John Quiggin distinguishes between the Laffer curve and Laffer's analysis of tax rates, writing that the Laffer curve was "correct but unoriginal" and that Laffer's analysis that the United States was on the wrong side of the Laffer curve "was original but incorrect."

Laffer was an economic adviser to Kansas Governor Sam Brownback, who in 2012 zeroed out state tax liability for about 330,000 of the top wage earners in the state, called the Kansas experiment, contending it would be a "shot of adrenaline into the heart of the Kansas economy." Laffer was paid $75,000 to advise in the established of Brownback's tax cut plan, and gave Brownback his full endorsement, stating that what Brownback was doing was "truly revolutionary" and would bring "enormous prosperity" to Kansas. The state, which had before had a budget surplus, a person engaged or qualified in a profession. a budget deficit of approximately $200 million in 2012. Drastic cuts to state funding for education and infrastructure were implemented tobudget deficits and the Kansas economy underperformed relative to neighboring states. Brownback's tax overhaul was intended in a June 2017 article in The Atlantic as the United States' "most aggressive experiment in conservative economic policy". The drastic tax cuts had "threatened the viability of schools and infrastructure" in Kansas. A supermajority of lawmakers in the Kansas legislature, both Democrats and Republicans, repealed the tax cut in June 2017, overriding Brownback's veto.