3 ms·

I mean, you have essentially stated that the Laffer curve is correct.

• CPLX 8y ago
  The Laffer curve isn't defined by the phrase "past a certain point, increasing taxation is futile" It's defined by an actual curve. That's why it's called the Laffer curve. It could be a linear relationship with a ceiling. In which case it would not be the Laffer curve, it would be a straight line meeting another straight line. Which is different. Regardless, the defining characteristic of the alleged curve is that it slopes backwards on itself, therefore lowering taxes will increase revenue. That phenomenon has not been observed in the wild.
  • pcstl 8y ago
    That it has not been observed in the wild (which is arguable) does not mean that it is not real. It is quite obvious that a tax rate of 0% would lead to no revenue. It is also obvious that a tax rate of 100% would not lead to the full expected revenue, as people would need to evade taxes in order to be able to survive. If we assume that tax revenue is a continuous function of tax rate, there must be an inflection point. The Laffer curve is indeed a curve, but which curve it is is not specified by the theory. The theory simply follows from the argument I have outlied above. It is not a specific curve, it simply states that, if we take tax revenue to be a near-continuous function of tax rate, it must not be a monotonic function, but instead have an inflection point.