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[[Image:Laffer_curve.jpg|right|thumb]]
The '''Laffer curve''' illustrates that increasing [[tax rates]] may decrease government revenue as people stop working, and increasing tax rates towards 100% causes government revenue to decline to zero as everyone stops working. Government revenue is not always increased by increasing taxes. This curve is named after [[Arthur Laffer]], an influential economist behind the tax cuts of President [[Ronald Reagan]].
The '''Laffer curve''' illustrates that increasing [[tax rates]] may decrease government revenue as people stop working, and increasing tax rates towards 100% causes government revenue to decline to zero as everyone stops working. Government revenue is not always increased by increasing taxes. This curve is named after [[Arthur Laffer]], an influential economist behind the tax cuts of President [[Ronald Reagan]].
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]].
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]].
==References==
==References==
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[[category:economics]]
[[category:economics]]