Laffer curve


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Laf·fer curve

or Laf·fer Curve  (lăf′ər)
n.
A curved graph that illustrates the theory that, if tax rates rise beyond a certain level, they discourage economic growth, thereby reducing government revenues.

[After Arthur Laffer (born 1940), American economist.]

Laffer curve

(ˈlæfə)
n
(Economics) economics a curve on a graph showing government tax revenue plotted against percentage tax rates. It has been used to show that a cut in a high tax rate can increase government revenue
[C20: named after Arthur Laffer (born 1940), US economist]
ThesaurusAntonymsRelated WordsSynonymsLegend:
Noun1.Laffer curve - 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
graph, graphical record - a visual representation of the relations between certain quantities plotted with reference to a set of axes
References in periodicals archive ?
These reductions can lead to a bell-shaped relationship between tax rates and government revenue known as the Laffer curve (for an example, see Figure 1).
The Laffer Curve and supplyC side economics served as the foundation for Reaganomics in the 1980s when Dr.
A cut in whiskey taxes after the Civil War gives a nice example of the Laffer curve.
The Laffer Curve illustrates the relationship between tax rates and tax revenue.
We would be on the "wrong" side of the Laffer Curve, and that would be a good thing.
He partnered with Art Laffer, of Laffer Curve fame, who posited that excessive tax rates would reduce government revenues rather than increase them.
This was referred to as "scientific taxation"--an early formulation of the Laffer Curve.
In addition, the downward-sloping curve applies only to the second (bad) section of the Debt- Laffer curve which indicates negative relationship between the stock of external indebtedness and expected of repayment (which represent by the GDP growth rate).
The early back of the napkin version of the Laffer curve would go on to become the basis for Reaganomics and supply-side economics.
Oversupply reduces aggregate taxable value--it's a form of the Laffer curve.
2) Usually, the Laffer curve is portrayed as having an inverted U shape, implying that it has both upward and downward sloping sections (see Figure 1).
In discussing progressivity and drawing on the Laffer curve (or as an MSc student of mine recently commented 'you're having a Laffer') soaking the rich does not generate anticipated revenue and only increases incentives for avoidance, begging the question: does CGT only really exist to serve as a barrier against income tax avoidance?