The Laffer curve is based on the idea that if the tax rate is sufficiently high, then raising it even more will actually reduce total tax revenues. According to Laffer, this happens because the growing tax rates reduce economic activity at an even faster rate.

Question

Quizplus · Accepted Answer

This is the central idea behind the Laffer Curve, which suggests that there is an optimal tax rate beyond which increasing tax rates will actually lead to a decrease in total tax revenue as economic activity slows down.

The Laffer Curve Is Based on the Idea That If