What Movies and Cigarettes Tell Us About the Laffer Curve

August 10, 2009 by Douglas A. McIntyre

John Tamny of RealClearMarkets

The great economist Arthur Laffer long ago observed that high rates of taxation don’t always correlate with high levels of government revenue. If the tax–or price–put on certain activities is too high, individuals will often change their behavior to avoid paying it.

Legislators have for the longest time resisted Laffer’s reasoning, and, as evidenced by the electorate’s willingness to elect politicians eager to increase taxes, voters aren’t completely sold either. But as individuals, on the micro level, it seems we’re all correctly enthralled by the “Laffer Curve.”

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