What does the Laffer curve do
A)It relates income tax rates to total income taxes collected.
B)It relates income to unemployment.
C)It relates tax rates to deadweight welfare losses.
D)It relates government welfare payments to the birth rate.

Question

Quizplus · Accepted Answer

The Laffer curve shows the relationship between tax rates and total revenue collected by the government. It suggests that there is an optimal tax rate that maximizes revenue, beyond which increasing tax rates may actually lead to a decrease in revenue due to disincentives to work and invest.

What Does the Laffer Curve Do