Arthur Laffer’s “curve” is one of the most destructive ideas in modern economics.
Sketched on a napkin in the 1970s, it claimed that cutting tax rates could increase government revenue.
It became gospel for Reagan, Thatcher and every neoliberal government since.
But it was wrong.
In this video, I explain why Laffer misunderstood tax, ignored inequality, and helped unleash tax competition that undermined democracy.
I debated Laffer in person — and I’ll show you why his logic collapses when tested against modern money and real economies and the idea that fair taxation builds strong societies, whilst low taxation builds fragile ones.
00:00 – Arthur Laffer and the birth of the Laffer Curve
01:10 – The napkin sketch that shaped neoliberal economics
02:00 – The “optimal tax rate” and Laffer’s flawed logic
03:00 – Why the Laffer Curve took hold in politics
04:00 – My debate with Arthur Laffer at the OECD
05:00 – The myth of the revenue-maximising tax rate
06:00 – Ignoring inequality and real-world behaviour
07:00 – Evidence from high-tax, high-growth economies
08:00 – Modern Monetary Theory and why tax doesn’t fund spending
09:00 – The true purpose of tax: reclaiming and redistributing
10:00 – How the Laffer myth fuels inequality and state shrinkage
11:00 – Tax competition: a race to the bottom
12:00 – The democratic cost of tax avoidance and global havens
13:00 – Why fair taxation builds strong societies
14:00 – Ending the myth: replacing competition with cooperation
15:00 – The Laffer Curve’s legacy and what must change
Credit to : Richard J Murphy