It’s time finally to jettison the convenient claim that taxing the rich more would only reduce tax revenue. Inspiration for reform can be gained from such pioneers as the state of Massachusetts. Da Social Europe.
Fifty years ago, a highly influential economics theorem was born—the ‘Laffer curve’. An apparently simple illustration of how excessive taxation damaged the economy, it served in all policy arenas as an encouragement to reduce taxes, especially on the richest.
The five decades since have however provided many examples of tax cuts at the top damaging society, without improving economic performance. The time has come to retire the Laffer curve.
‘Trickle down’ economics
On September 13th 1974, the Chicago economist Arthur Laffer sketched his famous curve on a restaurant napkin in Washington DC. He claimed that, beyond a certain point, any further increase in tax rates would result in lower tax revenue and falling economic output.
