The Laffer Principle: Why it's no laughing matter

'A theory that adds a dash of intrigue to the mix'

clock • 3 min read

Neil MacGillivray explores the Laffer Principle and explains why it is actually not a laughing matter

Taxation is a never-ending debate that often divides not only political parties but often within a political party. With a general election on the horizon and the current manic economic climate, the arguments on the best way forward on tax policy are heating up. Enter the Laffer Principle, a theory that adds a dash of intrigue to the mix. Named after the economist Arthur Laffer, the principle gained prominence in the 1980s and the theory suggests that there is an optimal tax rate that maximises government revenue. In simple terms, it asserts that at some point, increasing tax rates may l...

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