Laffer Curve

choi

Allysia Finley, America Needs a Supply-Side Comeback. Wall Street Journal, Aug 17, 2025, at page A 11 (in the column "Weekend Interview" -- this week with Arthur Laffer).
https://www.wsj.com/opinion/amer ... mist-taxes-039a416e

(a) Excerpt in the window of print: "The man who drew the Laffer Curve is optimistic about the prospects for pro-growth tax-cuts, the current GOP heterodoxies notwithstanding.

(b) the first five paragraphs:

"Soon after Gerald Ford became president in 1974, Dick Cheney and Donald Rumsfeld—both serving in the White House—met economist Art Laffer and Wall Street Journal editorial writer Jude Wanniski for dinner at a Washington restaurant to discuss their disagreement with the president’s support for raising taxes.

"Mr Laffer sketched a bow on a napkin depicting the relationship between tax rates and government revenue—the eponymous Laffer Curve. It depicts the proposition that tax revenue rises with marginal tax rates only up to a point—beyond which revenue starts to decline as people work and invest less. Mr Laffer scribbled on the napkin: 'If you tax a product less results. If you subsidize a product more results. We've been taxing work, output and income and subsidizing non-work, leisure and un-employment. The consequences are obvious!'

"Perhaps today, but they weren’t always. Over the last 50 years, the loquacious Mr Laffer has been a driving force in supply-side economics, which has resulted in lower taxes and higher living standards. His insight helped shape the 2017 Tax Cuts and Jobs Act, which slashed the corporate tax rate to 21% from 35% and cut the top personal income-tax rate to 37% from 39.6%.

"Donald Trump notes in a foreword to Mr Laffer's 2022 book, 'Taxes Have Consequences: An Income Tax History of the United States': 'Businesses responded to the greater incentives: they earned more, their workers earned more, products were produced more efficiently, tax shelters shrunk, and noncorporate tax revenues rose by a good deal more than corporate tax revenues shrank!'

"Today, some Republicans have forgotten the lessons of the Laffer Curve—or failed to learn them in the first place. They want to raise taxes on corporations and the so-called rich to raise more revenue to redistribute to the working class. Mr Laffer has one word for them: Don't.

Note:
(a) "Soon after Gerald Ford became president in 1974, Dick Cheney [White House Deputy Chief of Staff from December 1974 to November 1975, and Chief of Staff in 1975 succeeding Rumsfeld] and Donald Rumsfeld [White House Chief of Staff in 974 and Secretary of Defense 1975-1977]-—both serving in the White House—met * * * "
(b) "If you tax a product less results. If you subsidize a product more results."

"If you tax a product[,] less [tax] results. If you subsidize a product[,] more [subsidy] results."
(c)
(i) Laffer curve
https://en.wikipedia.org/wiki/Laffer_curve
(top graph)
(ii)
(A) supply-side economics
https://en.wikipedia.org/wiki/Supply-side_economics
("According to supply-side economics theory, consumers will benefit from greater supply of goods and services at lower prices, and employment will increase.[3] Supply-side fiscal policies are designed to increase aggregate supply, as opposed to aggregate demand * * * A basis of supply-side economics is the Laffer curve * * * The term is contrasted with demand-side economics")
(B) "Demand-side economics traces its origins to British economist John Maynard Keynes. He argued there is no automatic stabilizing mechanism built into an economy, and that as a result state intervention is necessary to maintain output.[6]"  en.wikipedia.org for "demand-side economics."
(d) Yesterday US House tax bill collapsed due to rebellion from conservative wing of GOP, not because it did not want tax cut but because they wanted something else (one was more budget cut).