Laffer Curve Napkin

Laffer Curve Napkin

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In 1974 economist Art Laffer sketched a new direction for the Republican Party on this napkin. Displeased with President Gerald Ford’s decision to raise taxes to control inflation, four men got together at a Washington, DC restaurant to think about alternatives. Laffer was joined by journalist Jude Wanniski and politicians Dick Cheney and Don Rumsfeld. Laffer argued that lowering taxes would increase economic activity. Wanniski popularized the theory, and politicians Don Rumsfeld and Dick Cheney carried it out.
The cloth napkin was taken as a souvenir by Jude Wanniski. The napkin reads “If you tax a product less results/If you subsidize a product more results./We've been taxing work, output and income and subsidizing non-work, leisure and un-/employment./The consequences are obvious!” with an image of the laffer curve in the middle. The bottom of the napkin reads To Don Rumsfeld/at our Two Continents/Rendezvous/ 9/13/74/Art B. Laffer"
Object Name
date made
place made
United States: District of Columbia, Washington
Physical Description
white (overall color)
overall: 15 in x 15 in x 1/8 in; 38.1 cm x 38.1 cm x.3175 cm
ID Number
catalog number
accession number
Credit Line
Gift of Patricia Koyce Wanniski
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Work and Industry: Production and Manufacturing
Industry & Manufacturing
American Enterprise
American Enterprise
Exhibition Location
National Museum of American History
Data Source
National Museum of American History
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Laffer was able to put into graphic form what is simply common sense. The most entertaining aspect of this article is the obvious lack of common sense exhibited in some of the comments. One just has to grin....
Since the president awarded Art Laffer the Medal Of Freedom if searched on line for background on the Laffer curve. Thanks for posting the story behind the tax theory with the sketch of a normal distribution curve that supports incentivizing increased production and tax revenue. Art Laffer also coauthored "Trumponomics" gratifying the president's ego for recognizing his tax cut legislation. Is economic theory on a napkin more of a science than atmospheric and oceanographic chemistry?
A replica (fake) of the actual cocktail napkin somehow seems appropriate for this intellectual fraud. This debunked theory has provided invaluable cover for the tax policies that have plundered America's middle class to enrich the extremely wealthy.
Agreed, President George H.W. Bush described the Laffer theory as Voodoo economics. President Trump just awarded Art Laffer the Medal of Freedom.
It was not Don Rumsfeld and Dick Cheney who carried out the tax reform suggested by the napkin. They dismissed the idea, as did others within the Ford administration at the time. It was Ronald Reagan who, several years and two administrations later, inaugurated a tax cut loosely inspired by these ideas.
It appears to me that the representation of the "Laffer Curve" on the napkin is incorrectly labeled? The area below the inflection point (lower tax rate) is usually labeled the normal range, while the area above the inflection point (higher tax rate) is usually labeled the prohibitive range. Has anyone asked asserted that Laffer drew this and if he did, that he has a typo?
What is incorrect is the 0% to 100% on the vertical axis. He's got that the wrong way around! How amusing!!
No, it's not incorrectly labelled, he's just drawn it slightly differently to how we normally draw it now. If tax rates are on the vertical axis and tax revenue on the horizontal axis then as the tax rate rises, then tax revenue would rise in the "normal" portion (bottom half) and then as tax rates continue to rise, revenues would drop back to zero (according to the theory) in the top half.
That labelling was likely a later refinement, a "polishing of the turd" if you will.

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