Funding the Future Laffer’s Curve was wrong
Nov 9, 2025
The discussion highlights the misinterpretations of Arthur Laffer’s Curve, arguing that lower taxes do not necessarily boost revenue. The host recounts a debate with Laffer, emphasizing the lack of empirical evidence supporting his claims. It also explores how the Curve ignores inequality and promotes harmful tax competition. Modern monetary theory reshapes our understanding of taxation's role in funding government and enforcing social policy. Ultimately, the podcast advocates for fair taxation to strengthen democracy and combat rising inequality.
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Debating Laffer In Person
- Richard Murphy recounts debating Arthur Laffer at the OECD and winning a public vote 58% to 31%.
- He uses this firsthand exchange to challenge Laffer's claims about revenue-maximising tax rates.
Laffer Curve's Flawed Incentive Logic
- Laffer's curve claims an optimal tax rate where higher rates reduce revenue because people stop working or evade taxes.
- Murphy argues this logic misreads incentives and ignores how most people cannot simply opt out of work.
Current Rates Far From The Tipping Point
- Empirical evidence shows most countries' effective tax rates (35–40%) sit far below the ~70% tipping point found in research.
- Therefore, cutting taxes in typical economies will almost always reduce government revenue.