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DON'T LAUGH AT LAFFER
Art Laffer is a well-known economist. His primary impact in the history of the United States of America has been on tax policy. He is best known as the architect of Ronald Reagan’s tax cuts of the early 1980’s and the ensuing economic explosion of the mid-1980’s.
Arthur Betz Laffer was born on August 14, 1940 in Youngstown, Ohio. Laffer achieved academic honors by winning a BA Degree in Economics from Yale University in 1962 followed on by a MBA in 1965 from Stanford University. He capped off his sojourn in academia with a PHD in Economics from Stanford in 1971.
Laffer has a long list of professional accomplishments. He had founded his own company and is CEO of Laffer and Associates in Nashville, Tennessee. He has given financial advice to many successful government officials over his career in particular on government taxation as related to prosperity within their nations.
Art Laffer is the first to admit that the so-called “Laffer Curve” was not his original idea. It was a combination of thought he learned from Ibn Khuldun, and John Maynard Keynes. The basic concept was based on the fact that if tax rates were 0% or 100% then government revenues would under both circumstances be zero, and that somewhere in between an ultimate tax rate could be found to both optimize economic activity and government revenues. Laffer differentiates between the arithmetic effect and the economic effect. The trick to optimization was twofold both taxation level and timing. No one has been more adept at exercising these concepts than Laffer. When Art Laffer talks taxation you ignore his advice at your own peril.
The use of The Laffer Curve is the art of interpretation in finding the correct value of the variable “t” (tax rate) on the curve. No one else in history has displayed the artistry in this task as Art Laffer. He made it work for Ronald Reagan and has shown in historical perspective how it worked for presidents Coolidge, and Kennedy.
Dr. Laffer was first reported to have shown this curve in 1974 to then Professor at University of Illinois Jude Wanniski, Donald Rumsfeld (Chief of Staff to President Gerald Ford), and Dick Cheney (Rumsfeld's deputy and former classmate at Yale) at the Two Continents Restaurant at the Washington Hotel in Washington, D.C. Laffer recalls Wanniski’s account,” I supposedly grabbed my napkin and a pen and sketched a curve on the napkin illustrating the trade-off between tax rates and tax revenues.” Wanniski named the trade-off "The Laffer Curve." Later Laffer recounted, “I personally do not remember the details of that evening, but Wanniski's version could well be true. I used the so-called Laffer Curve all the time in my classes and with anyone else who would listen to me to illustrate the trade-off between tax rates and tax revenues. My only question about Wanniski's version of the story is that the restaurant used cloth napkins and my mother had raised me not to desecrate nice things."
LAFFER NOW ADVOCATES FLAT TAX
Art Laffer isn’t resting on his laurels he is now advocating a plan for fair flat taxation to be employed by the Federal Government. I have seen him on numerous occasions with Neil Cavuto, and on CSPAN. Laffer has calculated that all Federal taxes can be replaced with a flat tax on all types of income of 15% plus a 3% value added tax (VAT). This includes payroll tax which alone is now greater that 15% for most working Americans. Aside from exclusions for low income Americans no other exclusions would apply.
This is a revolutionary concept. It would allow for the almost complete elimination of the IRS. Laffer has made estimates that this new tax policy would have such a stimulative effect on the economy that full employment could be attained within three to four years of implementation, and Federal revenues would allow for a balanced budget.
Along with the title, Don’t Laugh At Laffer I would also advise you don’t bet against Laffer. LAFFER KNOWS OF WHAT HE SPEAKS!!!!!!!!!!!!!!!
Steve Forbes explaines his views on flat tax.