Acton Institute Powerblog

Alejandro Chafuen in Forbes: Arthur Laffer’s Medal of Freedom

On June 19, President Trump awarded the Presidential Medal of Freedom to economist Arthur Laffer, noted as a proponent of supply-side economics and famous for the concept of the “Laffer curve,” which states that taxes will not increase revenue if they rise beyond a certain level. Alejandro Chafuen, Acton’s Managing Director, International, comments today in Forbes on Laffer and his award. He also adds a wealth of historical precedent, pointing out that Laffer’s ideas have roots in many thinkers of centuries past, both moral and economic.

Taxes relative to GDP are the highest they have been since records of the data have been kept, according to Organization for Economic Cooperation and Development (OECD) figures that provide comparisons of the 36 top world economies. The fact that the United States is on the 20% bracket with lower taxes is in great part due to Arthur Laffer.

The huge tax pressure around the world is not the result of chance – it is the natural outcome of a culture that has placed its faith in the role of government experts and efforts rather than in the private sector. Bloated bureaucracies that required high taxes also existed in the 16th and 17th centuries. Those who championed lower taxes in those eras used the name courtiers to describe the leaders of those bureaucracies who possessed greater access to kings, queens and decision makers.

Not all courtiers were superfluous in much the same way not all bureaucrats and public servants play to the “Deep State.” Many do indeed place citizens above their own interests. But in his magnificent small book Bureaucracy: Servant or Master, William Niskanen, former chairman of the board of the Cato Institute, showed how the bureaucracy’s tendency is to serve itself, not the taxpayer.

Whenever a leader relies on economists who propose solutions that go against bureaucratic rule – such as proposals to reduce taxes – we can expect opposition from a legion of “respected” experts. This happened to Arthur Laffer, who recently received the Medal of Freedom, the country’s highest honor. President Trump spoke at length during the award ceremony and was correct when he stated that prominent academics derided Laffer’s theories as “insanity,” “totally wacky,” and “completely off the wall.”

Laffer’s daring lesson – commonly known as the “Laffer curve,” which in brief states that when taxes rise above a certain level, they reduce the total amount collected – has a long and illustrious pedigree. Ludwig von Mises (1881-1973)   the noted Austrian economist, wrote in his most important economic treatise that “every specific tax, as well as a nation’s whole tax system, becomes self-defeating above a certain height of the rates.”

Read the entire article here.

(Homepage photo credit: Trump presents Arthur Laffer the Medal of Freedom. US Government, public domain.)

Joshua Gregor

Joshua Gregor is International Relations Assistant at the Acton Institute. Before coming to Acton he received a BA in philosophy from the Pontifical Athenaeum Regina Apostolorum in Rome and an MA in linguistics from Indiana University.