In 1974, economist Arthur Laffer sketched a curve on a napkin for two White House aides: Dick Cheney and Donald Rumsfeld. The idea was simple: at a tax rate of zero, the government collects nothing. At one hundred percent, nobody works — so it also collects nothing. Somewhere in between, there's a peak.

That napkin became the argument for fifty years of tax cuts: if you cut rates, economic activity and revenue will actually go up.

And the curve is real. When Kennedy cut the top rate from ninety-one percent, revenue rose. Rates that high were probably past the peak.

But the curve doesn't tell you where the peak is. Most economists put it somewhere above sixty percent. Today's top rate is thirty-seven. Kansas tried the experiment in 2012 — deep cuts, promised growth. Instead, revenue collapsed and schools went to four-day weeks. A Republican legislature reversed the cuts over the governor's veto.

The napkin was right. The question nobody asks is which side of the curve we're on.

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The napkin story. In December 1974, University of Chicago economist Arthur Laffer had dinner at the Two Continents Restaurant in Washington with Wall Street Journal editorial writer Jude Wanniski and two Ford White House officials: Chief of Staff Donald Rumsfeld and his deputy, Dick Cheney (Laffer's former Yale classmate). The topic was President Ford's proposed tax surcharge to fight inflation. Laffer argued the surcharge wouldn't raise the projected revenue — and sketched a curve on a napkin showing that revenue is zero at both 0% and 100% tax rates, with a peak somewhere between. Wanniski popularized the idea, naming it "the Laffer Curve" in a 1978 essay. It became the intellectual foundation of supply-side economics and the Reagan tax cuts. (Trivia: the cloth napkin displayed at the Smithsonian is a later keepsake recreation — the original was paper, and Laffer himself says he doesn't remember the original sketch.) (Smithsonian; Laffer's own account via Heritage; Smithsonian Magazine; NYT on the napkin's authenticity)

The curve is real — as far as it goes. No economist disputes the basic logic: a peak exists. The debate is entirely about where. When the Kennedy-Johnson cuts took the top rate from 91% to 70% (Revenue Act of 1964), federal revenue rose in the following years — rates that high, applied atop a code full of shelters, were likely past or near the revenue-maximizing point. This is the strongest genuine evidence for the supply-side position, and it's why the argument had real intellectual force in the 1970s. (Tax Project Institute; Concord Coalition)

Where's the peak? The most-cited academic estimate, from economists Peter Diamond (MIT, Nobel laureate) and Emmanuel Saez (Berkeley), puts the revenue-maximizing top rate at approximately 73%. Other mainstream estimates cluster between 60% and 80%. Today's top federal rate is 37%. In a 2012 IGM Chicago survey of leading economists across the political spectrum, essentially none believed current U.S. rates were on the far side of the peak — meaning essentially none believed a rate cut today would raise revenue. (Diamond & Saez, Journal of Economic Perspectives 2011; IGM Forum)

Kansas: the real live experiment. In 2012, Governor Sam Brownback signed one of the largest state tax cuts in U.S. history, cutting the top rate from 6.45% to 4.9% and exempting pass-through business income entirely. He called it, in his own words, "a real live experiment" in supply-side policy. The results: revenue plunged, producing a $900 million shortfall; the state's bond rating was downgraded twice; reserves were exhausted; road maintenance stretched from a 10-year to a 50-year schedule; and some school districts moved to four-day weeks. Promised job growth (up to 25,000/year) never materialized — Kansas lost jobs the first year and lagged all its neighbors. In June 2017, the Republican-controlled legislature repealed the cuts over Brownback's veto (Senate 27-13, House 88-31). Revenue stabilized, downgrades stopped, and schools returned to five-day weeks. Brookings called it "one of the cleanest experiments for measuring the effects of tax cuts on economic growth in the U.S." (CBPP; NPR; Brookings; Marketopia summary)

The honest bottom line. The Laffer curve is genuinely useful for evaluating claims: it tells you that "tax cuts pay for themselves" is true at some rates and false at others. At 91%, cuts plausibly raised revenue. At 37%, five decades of evidence — Reagan's deficits, the Bush deficits, Kansas, the CBO's scoring of the TCJA — says they don't. A listener equipped with this distinction can evaluate the next tax proposal on its merits: the question to ask isn't "is the Laffer curve real?" but "what rate are we at, and where's the peak?"

Related Civic Minute segments: One Direction (Tax History — the 60-year rate timeline). Related PM scripts: The 50-Year Experiment, Who Actually Pays.