Data from the effects of the substantial tax rate reductions in the 1980s
A) cast serious doubt on the Laffer curve as a guide for tax policy.
B) are consistent with the principles illustrated in the Laffer curve.
C) generally reject the idea that lower tax rates can lead to higher tax revenue.
D) support an "inverted Laffer curve" in which reducing tax rates for those with high incomes leads to lower tax revenue.

Question

Quizplus · Accepted Answer

The Laffer curve suggests that there is an optimal tax rate that maximizes revenue, and data from the 1980s showed that reducing high tax rates could lead to increased economic activity and potentially higher tax revenue, consistent with the Laffer curve's principles.

Data from the Effects of the Substantial Tax Rate Reductions