Laffer Curve (Noun)
Meaning
A graph purporting to show the relation between tax rates and government income; income increases as tax rates increase up to an optimum beyond which income declines.
Classification
Nouns denoting communicative processes and contents.
Examples
- The economist used the laffer curve to illustrate the concept that high tax rates can actually decrease government revenue.
- Critics argue that the laffer curve is an oversimplification of the complex relationship between tax rates and government income.
- Proponents of supply-side economics often cite the laffer curve as evidence that tax cuts can lead to increased government revenue.
- The laffer curve suggests that there is an optimal tax rate that maximizes government income, beyond which further tax increases will lead to decreased revenue.
- In reality, the laffer curve is often difficult to apply in practice, as the optimal tax rate can vary depending on a range of factors.