According to the Laffer curve, when the tax rate is 100 percent, tax revenue will be:
A) 0.
B) at the maximum value.
C) the same as it would be at a 50 percent tax rate.
D) greater than it would be at a 50 percent tax rate.
E) the same as it would be at a 20 percent tax rate.

Question

Quizplus · Accepted Answer

The Laffer curve suggests that there is a point after which increasing tax rates lead to a decrease in tax revenue. At a tax rate of 100 percent, taxpayers would have no incentive to work or invest, leading to a total collapse of the economy and therefore, zero tax revenue collected.

According to the Laffer Curve, When the Tax Rate Is