The Laffer Curve has been criticized by mainstream economists because
A)there is no theoretical possibility of higher tax rates leading to lower tax revenues.
B)higher tax rates do not create negative incentive effects.
C)tax cuts are just spent, not saved as predicted by the theory.
D)savers look only at real interest rates, not nominal interest rates.
E)empirically, tax cuts have not led to higher tax revenues.

Question

Quizplus · Accepted Answer

Empirical evidence from various countries and time periods has not consistently supported the claim that tax cuts lead to higher tax revenues. In many cases, tax cuts have resulted in lower revenues due to a combination of factors such as reduced government spending, changing economic conditions, and shifts in taxpayer behavior. Mainstream economists generally reject the notion that tax cuts pay for themselves through increased economic growth and revenue generation.

The Laffer Curve Has Been Criticized by Mainstream Economists Because