MTI113: The Laffer Curve, with Dr. Arthur Laffer

Arther 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 explains how there are two effects tax rates have on revenues:

  • The amount of tax you collect per dollar of tax base
  • The economic effect from reducing tax base by raising taxes

These two effects always work in opposition to each other. For example: A business can increase prices but will end up selling fewer widgets (like the “reducing tax base” side of the Laffer Curve) and a business can cut prices so low that they sell tons of widgets but lose money in the process (similar to the tax collected per dollar).

The Laffer Curve “relates tax rates to total revenues”, says Laffer in this exclusive interview by Doug Goldstein.

You can find more about Arthur at LafferCenter.com

Mr. Laffer’s books:

An Inquiry into the Nature and Causes of the Wealth of States:  How Taxes, Energy and Worker Freedom Change Everything

Dollarlogic: A Six-Day Plan to Achieving Higher Investment Returns by Conquering Risk

More books by Arthur Laffer on Amazon.com

 

Today’s Panelists

Doug Goldstein | Doug’s YouTube Channel
Linda P. Jones | Be Wealthy and Smart
Joe Saul-Sehy | Kiplinger names Stacking Benjamins “Best Finance Podcast 2016”
Miranda Marquit | Student Loan Hero

 

For a quick bio of each of our show participants, head on over to our panelists page.Send us your questions for a future Listener Letters episode