The Laffer Curve, By Mark Koba

1427 WordsMay 6, 20176 Pages
So, what exactly is the Laffer curve? According to “The Laffer Curve:CNBC Explains, by Mark Koba”, The Laffer Curve is an economic tax theory that argues that increasing tax rates beyond a specific point would prove to eventually be counter-productive to the economy as well as government revenue. The Laffer curve is a special graph that depicts the relationship between a government’s tax rate as a whole as well as the number of tax revenue it receives. According to Laffer Curve Center’s article, the Laffer curve is one of the large theoretical constructs of the supply side of economics. They also go deeper as to say that in simplicity, the Laffer Curve illustrate a picture of the trade of that dwells between tax rates and the total tax…show more content…
The response to revenue to a tax rate change will be reflected on depending on what the tax system is in place at that specific moment as well as the time period, the movement of it inside the underground activities, the levels of tax rate that is already in place, the prevalence of legal and accounting-driven tax loopholes, and the proclivities of the productive factor. When analyzing the concepts of the Laffer Curve it is detrimental to understand all of the aspects that make up the Laffer curve. When analyzing it is simple to point to the idea that if there are no taxes, then there will be no income for the government revenue. However, one question remains whenever the government decides to set a high tax. What affect will this high tax have on the governments revenue? Naturally I assumed that if the government took the action of implementing a higher tax in their system, then this would mean that they would receive a higher a revenue from the people. I was wrong in this sort of thinking, because this is generally not what happens. I have come to find out through research from the article “Exploring the Laffer Curve: Behavioral Responses to Taxation By: Samuel Kazman” that whenever the government sets a high tax on the people, the causes a sense of reluctance in them to pay the taxes. No one is willing to give a large portion of their income to the government, and if they were forced to then this would cause for them to

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