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If the tax rate is higher than t* in the Laffer curve below, then increasing taxes causes government revenue to decrease. Few dispute the underlying principle of the Laffer curve, but the debate centers on where to set the tax rate to obtain the maximum revenue.
If the tax rate is higher than t* in the Laffer curve below, then increasing taxes causes government revenue to decrease. Few dispute the underlying principle of the Laffer curve, but the debate centers on where to set the tax rate to obtain the maximum revenue.
In the Reagan era, the Laffer Curve demonstrated that tax cuts lead to a near doubling of federal tax reciepts ($500 billion to $900 billion). <ref>[http://www.cato.org/pubs/pas/pa-261.html Supply Tax Cuts and the Truth About he Reagan Economic Record], by William A. Niskanen and Stephen Moore, Cato Policy Analysis No. 261 October 22, 1996.<ref>
<center>
<center>
[[Image:Laffer_curve.jpg]]
[[Image:Laffer_curve.jpg]]
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==References==
<references/>
[[category:economics]]
[[category:economics]]