The Rest Is Money 219. When Do Tax Cuts Pay For Themselves?
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Oct 27, 2025 Renowned economist Art Laffer, famous for the Laffer curve, shares his insights on taxation and economic growth. He argues that cutting top income tax rates can spur both revenue and growth, ultimately benefiting the less fortunate. Laffer critiques Liz Truss's mini-budget for lacking funded reforms and discusses Trump's trade stance, supporting free trade while acknowledging the strategic use of tariffs. They also touch on the potential of AI-driven growth and its risks, hinting at deeper explorations in the future.
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Taxation As The Primary Growth Lever
- Art Laffer places taxation first among policy levers for national growth because tax rates shape incentives and outcomes.
- He argues the right tax structure can unlock broader economic improvements across spending, monetary policy, regulation and trade.
Top Rates Drive Big Behavioural Shifts
- Laffer argues cutting top marginal income tax rates spurs growth and can increase reported tax revenue from the wealthy.
- He cites historical U.S. data showing revenue from the rich fell after top-rate increases and rose after cuts.
Bracket Matters: Laffer Curve Varies By Income
- Laffer distinguishes effects by tax bracket: cuts for low brackets usually lose revenue while cuts for top brackets can raise revenue.
- He attributes this to wealthy taxpayers' greater ability to shelter, time or relocate income in response to rates.
