Whilst some economists are arguing that EU countries need to reduce taxes and increase government spending in order to boost demand, this is not a course that Britain has taken for very good reason. Nevertheless, raising tax rates over the last few years has been a mistake. This is not for the Keynesian reasons often cited but because higher taxes damage the supply side of the economy and reduce economic growth. Indeed, it can be argued that many of Britain’s taxes are so high that we are on the wrong side of the “Laffer curve” and that reductions in tax rates would actually raise revenues.
Dr Arthur Laffer’s economic acumen and influence in triggering a world-wide tax-cutting movement in the 1980s have earned him the distinction in many publications as “The Father of Supply-Side Economics.” One of his earliest successes in shaping public policy was his involvement in Proposition 13, the ground-breaking California initiative that drastically cut property taxes in the state in 1978. Dr. Laffer was a member of President Reagan’s Economic Policy Advisory Board for both of his two terms (1981-1989). He was a member of the Executive Committee of the Reagan/Bush Finance Committee in 1984 and was a founding member of the Reagan Executive Advisory Committee for the presidential race of 1980. He also advised Prime Minister Margaret Thatcher on fiscal policy in the United Kingdom during the 1980s.
Dr. Laffer has been widely acknowledged for his economic achievements. He was noted in Time Magazine’s March 29, 1999, cover story “The Century’s Greatest Minds” for inventing the Laffer Curve, which it deemed one of “a few of the advances that powered this extraordinary century”. He was listed in “A Dozen Who Shaped the ‘80s,” in the Los Angeles Times on Jan. 1, 1990, and in “A Gallery of the Greatest People Who Influenced Our Daily Business,” in the Wall Street Journal on June 23, 1989. His creation of the Laffer Curve was deemed a “memorable event” in financial history by the Institutional Investor in its July 1992 Silver Anniversary issue, “The Heroes, Villains, Triumphs, Failures and Other Memorable Events.”
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