Arthur Betz Laffer is an American economist who first gained prominence
during the Reagan administration as a member of Reagan's Economic Policy
Advisory Board. 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. He is the author and co-author of many
books and newspaper articles, including Supply Side Economics: Financial
Decision-Making for the 80s. Laffer is Policy Co-Chairman of the Free
Enterprise Fund and serves on the "Board of Scholars" of the American Legislative
Exchange Council. Life and career
Laffer was born in Youngstown, Ohio, the son of Marian Amelia "Molly", a
homemaker and politician, and William Gillespie Laffer, a president of the
Clevite Corporation. He was raised a Presbyterian. Laffer earned a B.A. in
Economics from Yale University and an M.B.A. and a Ph.D. in Economics from
Stanford University. While he was teaching at the USC
Marshall School of Business, Laffer played a key role in writing California
Proposition 13, the property-tax-cap initiative that inspired a tax revolt
across the nation. In the mid-1980s, Laffer left to teach
at Pepperdine University in nearby Malibu. Laffer remained on the faculty
for several years. In 1986, Laffer was a candidate for the
Republican nomination for the U.S. Senate—which he lost in the California
primary to U.S. Congressman Ed Zschau who lost in the general election to the
incumbent, Democrat Alan Cranston. Laffer identifies himself as a staunch
fiscal conservative and libertarian. He has stated publicly that he voted for
President Bill Clinton in 1992 and 1996. Laffer references President Clinton's
conservative fiscal and unregulated market policies as cornerstones of his
support. In 2008, he was named a Distinguished
University Professor of Economics by Mercer University in Georgia.
= Professional activities = Laffer is the founder and CEO of Laffer
Associates in Nashville, Tennessee, an economic research and consulting firm
that provides global investment-research services to institutional asset
managers, pension funds, financial institutions, and corporations.
He sits on the board of directors of several public and private companies.
Laffer has been appointed to the advisory board of Sonenshine Partners,
an independent investment bank focused on providing integrated strategic,
financial and corporate advisory services. In 2004 Laffer joined the
Board of Pillar Data Systems, a non-public Data Storage Company funded
by Tako Ventures, a funding arm of Larry Ellison. In 2008, Laffer joined the
Board of Alpha Theory, a non-public Fundamental Portfolio Optimization
software for hedge and mutual funds. Laffer recently joined the advisory
board of Collabarium Capital. In 2010, Laffer joined the Boards of
Executive Trading Solutions, an LLC providing the top technological solution
for management of Rule 10b51 stock trading plans, and Consensus Point, a
provider of an enterprise prediction markets platform.
In 2015, Laffer joined the board of General Employment Enterprises,, a
rapidly growing staffing company located in Illinois.
Laffer also regularly writes opinion articles in The Wall Street Journal.
Laffer curve Although he does not claim to have
invented the Laffer curve concept, it was popularized with policy-makers
following an afternoon meeting with Nixon/Ford Administration 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 not new; Laffer
himself says he learned it from Ibn Khaldun and John Maynard Keynes.
A simplified view of the theory is that tax revenues would be zero if tax rates
were either 0% or 100%, and somewhere in between 0% and 100% is a tax rate which
maximizes total revenue. Laffer's postulate was that the tax rate that
maximizes revenue was at a much lower level than previously believed: so low
that current tax rates were above the level where revenue is maximized.
Numerous leading economists have rejected the viewpoint that the Laffer
Curve's postulation of increased tax revenue through a rate cut applies to
current federal US income taxes in the medium term. When asked whether 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,” 96% of economists surveyed in 2012 disagreed.
In response to this survey question, Richard Thaler of the University of
Chicago said, “That’s a Laffer.” Publications
The following is a partial list of publications written primarily by
Laffer, with co-authors indicated, in order by date:
"The U.S. Balance of Payments – A Financial Center View," Law and
Contemporary Problems 34, pp. 33–46. "Vertical Integration by Corporations,
1929–1965," Review of Economics and Statistics 51, pp. 91–93.
"Trade Credit and the Money Market," J. Political Economy 78, 239–267.
(with Eugene F. Fama) "Information and Capital Markets" J. Business 44, pp.
289–298. (with R. David Ranson) "A Formal Model
of the Economy," J. Business 44, pp. 247–270.
(with Eugene F. Fama) "The Number of Firms and Competition", American
Economic Review 62, pp. 670–674. "Monetary Policy and the Balance of
Payments," J. Money, Credit, and Banking Part I 4, 13–22.
(with Richard Zecher) "Some Evidence on the Formation, Efficiency and Accuracy
of Anticipations of Nominal Yields," J. Monetary Economics 1, pp. 327–342.
Victor A. Canto, Douglas H. Joines, and Arthur B. Laffer, Foundations of
Supply-Side Economics – Theory and Evidence.
"Reinstatement of the Dollar: The Blueprint," Economic Notes 0, pp.
158–176. "A High Road for the American Automobile
Industry," World Economy 8, pp. 267–286. "The Ellipse: An Explication of the
Laffer Curve in a Two-Factor Model," The Financial Analyst's Guide to Fiscal
Policy, pp. 1–35. "Heightened foreign competition only
route for American prosperity," The Journal Record.
"America in the World Economy: A Strategy for the 1990s: Commentary,"
America's Global Interests: A New Agenda, pp. 122–125.
(with Christopher S. Hammond) "Either California's Housing Prices Are Going to
Fall or California's in for One Helluva Rise in Personal Income," Investment
Strategy and State and Local Economic Policy, pp. 49–64.
"Trading Policy Outlook," Industrial Policy and International Trade, pp.
175–186, Volume 62 in Contemporary Studies in Economic and Financial
Analysis. "The Reagan-Clinton Presidency,"
International Economy 12, 22–24. (with Thomas J. Martin) "Bullish on
Japan," American Spectator pp. 28–30. "The Laffer Curve: Past, Present, and
Future," Heritage Foundation Backgrounder #1765.
"The Tax Threat to Prosperity", Wall Street Journal.
"The Age of Prosperity Is Over", Wall Street Journal.
(with Stephen Moore) "Soak the Rich, Lose the Rich", Wall Street Journal.
"Get Ready for Inflation and Higher Interest Rates", Wall Street Journal
"The Prognosis for National Health Insurance: A Colorado Perspective,
Independence Institute "Taxes, Depression, and Our Current
Troubles", Wall Street Journal References
External links Appearances on C-SPAN
Jude Wanniski, "Sketching the Laffer Curve," The Yorktown Patriot
Lukáš Kovanda, "Svět se vrátí k volnému trhu, říká otec Lafferovy křivky,"
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