Best of the Spectator NEW Reality Check: Britain is taxing itself to death – Arthur Laffer
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Oct 23, 2025 
Arthur Laffer, the famed economist who popularized the Laffer Curve and advised Reagan, shares his insights on Britain's economic struggles. He argues that high tax rates threaten the nation’s prosperity and believes that a dose of optimism and low taxes could revive the economy. Laffer compares Liz Truss's policies to Thatcher's, highlights the need for tax reform, and warns of potential economic collapse if taxing continues unchecked. He also advocates for decontrol of energy in the North Sea and critiques central banking practices.
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How The Laffer Curve Explains Tax Revenues
- The Laffer Curve links tax rates and tax revenues through incentives and a shrinking tax base when rates rise.
- There are two tax-rate zones: one where raising rates raises revenue and one where it reduces revenue due to discouraged activity.
Napkin Sketch That Made The Curve Famous
- Laffer recounts drawing the curve on a napkin for Ford aides including Don Rumsfeld and Dick Cheney.
- The sketch aimed to show a tax surcharge would not deliver the presumed revenue gains.
Britain Is Losing Its Global Economic Standing
- Britain’s GDP share has fallen dramatically over decades and high tax rates contributed to that decline.
- Laffer argues current UK tax rates sit beyond the revenue-maximising zone and have damaged prosperity.
