"Laffer explained that the relationship between the tax revenues and the tax rate was not as simple as one would expect. Doubling the tax rate, for example, does not double the tax revenues, because higher taxes disincentives people from working. To illustrate his point, Laffer famously sketched a curve on a napkin. It showed that both a tax rate at zero percent and one at hundred percent would yield no tax revenues.
A tax rate of zero percent would logically mean zero revenues, and one at 100 percent would disincentive people completely from working, which also means zero revenues. The implication, Laffer noted, is that somewhere between zero and hundred percent, there is a tipping point. Above this point, raising the tax rates actually would actually lead to such a damaging effect on economic incentives, that the collected taxes would actually be lower after the tax rate was raised.
The Islamic Golden Age
Since then, the Laffer Curve has been used by supporters of low taxes around the world to reinforce their ideas. In the US, it has helped to inspire a downward shift in taxation. Ronald Reagan’s administration introduced massive changes, which dropped the marginal tax rate to 28 percent. Since then, the taxes have again risen to 39.6 percent. However, even the proponents of high tax policy are aware of Laffer’s warnings: there is a limit to how high taxes can be raised.
The funny thing is that Arthur Laffer’s theory was far from new.
He was rediscovering a concept that had been acknowledged during the Golden Age Islamic period of free-market policy. Laffer has himself explained that he didn’t invent the curve, but took it from Ibn Khaldun, a 14th-century Muslim, North African philosopher. Indeed, many of the ideas we today associate with Western free-market thinkers originated in the Islamic world during the Islamic Golden Age.
The Islamic Golden Age lasted from the 8th century AD to the 13th century."
https://fee.org/articles/the-laffer-curve-was-discovered-by-medieval-islamic-philosopher/
A tax rate of zero percent would logically mean zero revenues, and one at 100 percent would disincentive people completely from working, which also means zero revenues. The implication, Laffer noted, is that somewhere between zero and hundred percent, there is a tipping point. Above this point, raising the tax rates actually would actually lead to such a damaging effect on economic incentives, that the collected taxes would actually be lower after the tax rate was raised.
The Islamic Golden Age
Since then, the Laffer Curve has been used by supporters of low taxes around the world to reinforce their ideas. In the US, it has helped to inspire a downward shift in taxation. Ronald Reagan’s administration introduced massive changes, which dropped the marginal tax rate to 28 percent. Since then, the taxes have again risen to 39.6 percent. However, even the proponents of high tax policy are aware of Laffer’s warnings: there is a limit to how high taxes can be raised.
The funny thing is that Arthur Laffer’s theory was far from new.
He was rediscovering a concept that had been acknowledged during the Golden Age Islamic period of free-market policy. Laffer has himself explained that he didn’t invent the curve, but took it from Ibn Khaldun, a 14th-century Muslim, North African philosopher. Indeed, many of the ideas we today associate with Western free-market thinkers originated in the Islamic world during the Islamic Golden Age.
The Islamic Golden Age lasted from the 8th century AD to the 13th century."
https://fee.org/articles/the-laffer-curve-was-discovered-by-medieval-islamic-philosopher/