An Interview with Arthur Laffer

A recent article in Barron’s recounts an interview with Arthur Laffer, an economist, who gained notoriety in 1974 by illustrating on a napkin his view on the relationship between growth and taxes while dining with President Gerald Ford, Donald Rumsfeld and Dick Cheney. Here are some highlights:

  • Regarding whether he has updated or edited his tax models, Laffer said that while wages and taxes change, the principles don’t change, “and the principles are what’s really critical.”
  • “If you have poor people,” Laffer argues, “write them a check,” rather than offering subsidies through the tax system. “If you give them a tax break on their income, there will still be single mothers who don’t get a benefit because they don’t have a job. You need to write them a check.”
  • “Taxes are all bad,” Laffer declared, adding, “People will evade, avoid, or otherwise not report taxable income.” Instead, he advocates for a low-rate, broad-based flat tax in which people would get taxed “fair and square, like everyone else, and we’d collect a lot more money.”
  • On Larry Kudlow (who Laffer mentored) and his new job at the White House, Laffer said, “He’ll be very effective.” Although Kudlow doesn’t seem to be aligned with Trump on the issue of tariffs, Laffer argues, “You don’t want to get advisors who are ‘yes’ people,” he said, adding that the Kudlow and Trump relationship is a “marriage made in heaven.”