Books

Taxes Have Consequences: An Income Tax History of the United States (Post Hill Press, 2022)

The definitive history of the effect of the income tax on the economy.

Ever since 1913, when the United States first imposed the income tax via constitutional amendment, the top rate of that tax has determined the fate of the American economy. When the top rate has been high, as in the late 1910s, the 1930s, 1940s, 1950s, and 1970s, the response of those with money and capital has been to curtail real economic activity in favor of protecting assets and income streams. Notable declines have come to the economy in these circumstances. The most brutal example was the Great Depression itself. When the top tax rate has been cut and held at reduced levels—as in the 1920s, the 1960s, in the long boom of the 1980s and 1990s, and briefly in the late 2010s—astonishing reversals have occurred. The rich have brought their money out of hiding and put it to work in the economy. The major swings in the American economy since 1913 have had an inverse relationship to income tax rates.

Taxes Have Consquences: An Income Tax History of the United States is available here.

The Emergence of Arthur Laffer: The Foundations of Supply-Side Economics in Chicago and Washington, 1966-1976 (Palgrave Macmillan, 2021)

The origins of supply-side economics lay in the academic work of two young professors on the University of Chicago economics faculties in the 1960s: Arthur B. Laffer and Robert A. Mundell. This book chronicles these origins. Its focus is on the chief concern of the nascent supply-siders, Laffer and Mundell: not taxation, but the international monetary system. These two Chicago economists contended that the “Bretton Woods” system of fixed exchange rates among major currencies and the dollar convertible in gold, still current in the 1960s, was serving the needs of the world economy admirably. The economics profession at large was of a different view and urged flexible exchange rates and the elimination of gold from official monetary affairs. 

Laffer and Mundell’s opponents won the day. Progressively from 1968-1973, the United States restricted and then ended gold convertibility, as the managers of the major currencies opted for flexible over fixed exchange rates. Laffer and Mundell left Chicago as these developments took hold—and a fearsome stagflation came over the world economy. The two economists responded by drawing upon the defense they had made of the forsaken gold/fixed-rate monetary system to compose a policy solution for stagflation. This was tax-rate cuts that at once would promote economic growth and stabilize currencies. 

Taxation came only at mid-course to supply-side economics. This school of thought first developed within the paramount macroeconomic debate of the 1960s—over the architecture of the international monetary system. 

The Emergence of Arthur Laffer: The Foundations of Supply-Side Economics in Chicago and Washington, 1966–1976 is available here.

JFK and the Reagan Revolution: A Secret History of American Prosperity (Portfolio, 2016)

The tax cut of 1964 was, along with the civil rights act of that year, the signature piece of legislation of the abbreviated John F. Kennedy presidency. Kennedy entered office in 1961 in the last month of the fourth recession in a dozen years and was committed to “get this country moving again,” as in his chief campaign slogan. Growth had been merely 2.5 percent per annum over the eight years of the Eisenhower presidency. Democrats and Republicans alike aspired for growth of double that, of 5 percent per year, and Kennedy took on this goal as his own. 

After getting business tax cuts and trade liberalization made law in 1962, and as he reaffirmed his support for the gold standard, Kennedy, in January 1963, introduced a bill designed by his treasury department to cut personal income tax rates across-the-board. In September it passed the House, and it was almost out of Senate committee in November. Lyndon Johnson signed JFK’s tax cut into law after an overwhelming vote in Congress in February 1964 as a memorial to the slain president. 

The economy and the markets responded to the Kennedy initiatives with such enthusiasm that economic growth immediately powered up to the 5-percent range during the thousand days of the Kennedy presidency and stayed at that elevated level through 1969. Postwar prosperity at last came into its own after the recessionary 1950s. 

How Kennedy conceived, designed, and implemented his tax cut, and its ultimate influence on the Reagan administration two decades later, is the story of JFK and the Reagan Revolution. It knocks over sacred cows including claims that the JFK tax cut was “Keynesian”—an impossibility for a permanent marginal rate cut such as that which Kennedy’s treasury designed. The book affirms that the central policy at the inflection point of the great run of post-World War II prosperity was JFK’s supply-side tax cut.  

JFK and the Reagan Revolution: A Secret History of American Prosperity is available here.

The Pillars of Reaganomics: A Generation of Wisdom from Arthur Laffer and the Supply-Side Revolutionaries (Pacific Research Institute, 2014)

In the 1980s, the major vehicles of federal economic policy—tax and spending, regulatory, and monetary policy—effectively coordinated with each other to implement the supply-side revolution, the result of which was the great economic boom of the 1980s and 1990s. First among those who developed supply-side economics was the economist Arthur B. Laffer. Laffer Associates, the firm that Laffer founded in 1978 and active today has turned out hundreds of papers in the supply-side tradition.

The Pillars of Reaganomics is a collection of the greatest hits of those Laffer Associates papers, from the 1980s through 2005. In the main, these papers have not only been left unconsulted by historians—they have not been made available to the public generally. They represent a comprehensive running commentary on the conception and implementation of the supply-side revolution. Incurring economic growth through low tax rates, good stable money, spare regulation, regulatory restraint, and free trade—the “five pillars of Reaganomics,” as Laffer has called them—is the subject of this commentary. 

The Pillars of Reaganomics: A Generation of Wisdom from Arthur Laffer and the Supply-Side Revolutionaries is available here.

Econoclasts: Econoclasts: The Rebels Who Sparked the Supply-Side Revolution and Restored American Prosperity (Intercollegiate Studies Institute, 2009)

From the book flap: At last, the definitive history of supply-side economics—an incredibly timely work that reveals the foundations of America’s prosperity when those very foundations are under attack. In the riveting, groundbreaking book Econoclasts, historian Brian Domitrovic tells the remarkable story of the economists, journalists, Washington staffers, and (ultimately) politicians who showed America how to get out of the 1970s stagflation and ushered in an unprecedented quarter-century run of growth and opportunity.

Econoclasts: The Rebels Who Sparked the Supply-Side Revolution and Restored American Prosperity is available here.