Laffer curve

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  • noun

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a graph purporting to show the relation between tax rates and government income

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The Laffer curve can also shift due to changes in the elasticity of the labor supply to a tax change.
Chart 6 shows the distributions of fiscal limits under an alternative scenario: I assume the government can no longer tax at the peak of the Laffer curve; instead the maximum tax rate is fixed at 40 percent.
Given this path, I compute the path of discount factors, which depend on people's optimization conditions as detailed in appendix A, and the path of maximum fiscal surpluses, which depend on the peak of the Laffer curve. With those in hand, I can compute the discounted sum of future maximum surpluses, [b*.sub.t], that is associated with this specific path of future shocks.
The Laffer curve and me theory of the fiscal bureaucracy.
(2004), The Laffer curve. Past, Present and Future, Heritage, Foundation.
(1999), Explorations of the Laffer curve, Wurzburg Economic Papers 99-09.
Finally after deriving the micro Laffer curves of individuals who differ in their wage rate and demonstrating how the multi-peaked aggregate macro Laffer curve is derived, we devote the last section to a discussion of some possible implications and conclusions.
The transformation from the individual curve to the aggregate Laffer curve does not lead necessarily to the same shape, and under certain conditions (conditions that appear to hold in many Western countries) it is more likely that the vertical summation of individualistic Laffer curves of different individuals will generate a curve with dual, multiple and even continuous regions of peak values of tax revenue.
The Laffer Curve, one of the icons of supply-side economics, was born (American Spectator, Jan/Feb 2002).
Which of the three Laffer curves in Chart 3 is the correct one for the 1980s under the Reagan administration?
However, it must be noted that the strong assumptions on the form of the utility and production functions may limit the shape of the associated Laffer curves.
It has been said that the virtue of the Laffer curve is that you can explain it to a congressman in half an hour and he can talk about it for six months.
Under the assumption that the governments' objectives are leviathan revenue maximization, she demonstrates that when two governments are allowed to tax the same good, the combined tax rate will lie on the backward-bending portion of the Laffer curve. To understand the logic behind her result, consider Figure 2a and b.
If only one government taxes a particular tax base, it could maximize tax revenue by setting a tax rate corresponding to the point at the peak of the Laffer curve. This is shown in Figure 2a.
This result implies that a single monopoly taxing authority can raise more revenue (taxing at point A, the peak of the Laffer curve) than the combined revenues of two taxing governments.