LAFFER, ARTHUR

born Aug. 14, 1940, Youngstown, Ohio, U.S. in full Arthur Betz Laffer conservative American economist whose theory that lowering tax rates would result in higher revenues influenced U.S. economic policy during the 1980s. Laffer studied economics at Yale University (B.A., 1963) and international economics at Stanford University (M.B.A., 1965; Ph.D., 1972). As chief economist at the Office of Management and Budget, Laffer drew attention for his supply-side economic theories, which held that reductions in federal taxes on businesses and individuals would lead to increased economic growth and, in the long run, to increased government revenue. This philosophy was illustrated by the Laffer curve, a graphical representation of Laffer's views on the relationship between tax rates and government revenue. During the 1970s, Laffer's economic model attracted the attention of many influential conservative journalists and politicians, including the Republican presidential candidate Ronald Reagan. In 1981 President Reagan implemented a significant reduction in tax rates; although a long economic expansion followed, it was accompanied by high and sustained federal deficits as tax revenues did not increase rapidly enough to balance government expenditures. Laffer worked as a political consultant while teaching at the University of Chicago (197476), the University of Southern California at Los Angeles (197684), and Pepperdine University (from 1984). He also served as a consultant to the U.S. Treasury and Defense departments (197277) and as an adviser to President Reagan on economic policy. Laffer made an unsuccessful attempt for the U.S. Senate in California in 1986. In the 1990s Laffer and his longtime partner, Victor A. Canto, cofounded an economics consulting firm, with an investment formula based on the assumption that businesses located in states with declining tax rates will experience greater growth than businesses in states where rates are rising.