https://www.veritaswiki.org/index.php?action=history&feed=atom&title=Laffer_CurveLaffer Curve - Revision history2026-10-19T17:17:17ZRevision history for this page on the wikiMediaWiki 1.45.3https://www.veritaswiki.org/index.php?title=Laffer_Curve&diff=64&oldid=prevToto: Created English encyclopedia entry on Laffer Curve following Wikipedia-style standards2026-10-06T04:13:37Z<p>Created English encyclopedia entry on Laffer Curve following Wikipedia-style standards</p>
<p><b>New page</b></p><div>The '''Laffer curve''' is a theoretical relationship between tax rates and tax revenue that illustrates the idea that, beyond a certain point, raising tax rates reduces total tax revenue. It is named after the economist [[Arthur Laffer]] and is often cited in debates about [[taxation]] and tax policy.<ref name="wiki">Wikipedia contributors, "Laffer curve".</ref><br />
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== The relationship ==<br />
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The Laffer curve posits that for a given economy there is a tax rate that maximises total tax revenue:<br />
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* At a tax rate of '''0%''', revenue is zero because no tax is collected.<br />
* At a tax rate of '''100%''', revenue is also zero because there is no incentive to work or produce, so the tax base disappears.<br />
* Between these extremes, revenue rises and then falls, producing a hump-shaped curve.<br />
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The tax rate that maximises revenue—the '''revenue-maximising rate'''—is unknown in practice and is the subject of ongoing debate.<ref name="wiki"/><br />
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== Interpretation ==<br />
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{| class="wikitable"<br />
! Position<br />
! Effect of a tax increase<br />
|-<br />
| Below the peak<br />
| Revenue rises.<br />
|-<br />
| At the peak<br />
| Revenue is maximised.<br />
|-<br />
| Above the peak<br />
| Revenue falls, because the tax base shrinks as activity is discouraged.<br />
|}<br />
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== Criticisms ==<br />
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The Laffer curve is often criticised for being difficult to apply in practice. The location of the peak is not known, and the shape of the curve depends on the responsiveness of the tax base to tax rates—that is, on elasticities. Critics note that the theory is sometimes used to argue for tax cuts without evidence that rates are on the downward-sloping portion of the curve. Nonetheless, the curve illustrates an important principle: taxes can dampen the activity they are levied on, so higher rates do not necessarily yield higher revenue.<ref name="wiki"/><br />
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== See also ==<br />
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* [[Taxation]]<br />
* [[Fiscal Policy]]<br />
* [[Tax incidence]]<br />
* [[Elasticity of Demand]]<br />
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== References ==<br />
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<references /><br />
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[[Category:Economics]]<br />
[[Category:Public economics]]<br />
[[Category:Taxation]]</div>Toto