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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. The consensus among economist is, however, that t* is above the current tax rates. <ref>Blanchard, O. ''Macroeconomics, 4th edition''. 2003, Upper Saddle River, New Jersey: Pearson Prentice Hall (p. 430-431, 500)</ref> <ref>Begg, D. Fischer, S. & Dornbusch, R. ''Economics, 8th Edition''. 2005, Berkshire, United Kingdom: McGraw-Hill (p. 289-290)</ref>

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. The consensus among economist is, however, that t* is above the current tax rates. <ref>Blanchard, O. ''Macroeconomics, 4th edition''. 2003, Upper Saddle River, New Jersey: Pearson Prentice Hall (p. 430-431, 500)</ref> <ref>Begg, D. Fischer, S. & Dornbusch, R. ''Economics, 8th Edition''. 2005, Berkshire, United Kingdom: McGraw-Hill (p. 289-290)</ref>

In the Reagan era, the Laffer Curve is thoughed to have demonstrated that tax cuts lead to a near doubling of federal tax receipts ($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> However, others dispute this <ref>Blanchard, O. ''Macroeconomics, 4th edition''. 2003, Upper Saddle River, New Jersey: Pearson Prentice Hall (p. 430-431, 500)</ref>, and claim the increased revenue can be at least partly attributed to a policy of [[deficit spending]].

In the Reagan era, the Laffer Curve is thought to have demonstrated that tax cuts lead to a near doubling of federal tax receipts ($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> However, others dispute this <ref>Blanchard, O. ''Macroeconomics, 4th edition''. 2003, Upper Saddle River, New Jersey: Pearson Prentice Hall (p. 430-431, 500)</ref>, and claim the increased revenue can be at least partly attributed to a policy of [[deficit spending]].

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