The GOP Heads Straight for the Laffer Curve

The corridors and conference rooms of Laffer Associates’ headquarters in Nashville are lined with fossils of ancient animals and photos of dead statesmen. But Arthur B. Laffer, the economic research firm’s chairman, is no relic. At age 70, Laffer bounds around the office, as vibrant as he was on the 1974 evening in Washington when he first sketched the arc that became known as the Laffer Curve.

Over dinner across the street from the Treasury Dept., Laffer scribbled on a napkin to show rising GOP stars Dick Cheney and Donald Rumsfeld how cutting high marginal tax rates could boost tax revenue. With lower rates, investors would create taxpaying businesses and hire workers, providing a windfall for Uncle Sam. Higher rates might sap people’s incentive to work. Almost four decades later, Republicans’ obsession with taxes proves the staying power of Laffer’s simple idea.