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I can't. There's basically no theory behind the "Laffer curve." IIRC, it relies on two assumptions. Assumption #1: If the income tax rate is 0%, the government
by cs702 2y ago
I can't. There's basically no theory behind the "Laffer curve." IIRC, it relies on two assumptions. Assumption #1: If the income tax rate is 0%, the government will collect zero income taxes. This assumption is basically a tautology. No one can disagree with it. Assumption #2: If the income tax rate is the maximum possible, 100%, the Laffer curve assumes the government will collect zero income taxes, because taxpayers will find ways to avoid paying all income taxes. This second assumption is questionable, because taxpayers might successfully avoid paying only some taxes. Even if you agree with both assumptions, there's no agreement as to what tax rate would maximize government tax collections.
- shermantanktop 2y agoIn other words, nobody can draw the curve, but people assume it is a simple shape with a single maximum…which is why I made my silly request. But if it were anything other than a talking point, I’d expect the possibility of complex Laffer curves with multiple local maxima.