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Laffer curve
Laf·fer curve or Laf·fer Curve L0016250 (lăf′ər)n. A curved graph that illustrates the theory that, if tax rates rise beyond a certain level, they discourage economic growth, thereby reducing government revenues.
[After Arthur Laffer (born 1940), American economist.]Laffer curve (ˈlæfə) n (Economics) economics a curve on a graph showing government tax revenue plotted against percentage tax rates. It has been used to show that a cut in a high tax rate can increase government revenue[C20: named after Arthur Laffer (born 1940), US economist]Thesaurus| Noun | 1. | Laffer curve - a graph purporting to show the relation between tax rates and government income; income increases as tax rates increase up to an optimum beyond which income declinesgraph, graphical record - a visual representation of the relations between certain quantities plotted with reference to a set of axes |
Laffer curve
Laffer curveA curve conjecturing that economic output will increase if marginal tax rates are cut. Named after economist Arthur Laffer.Laffer CurveAn upside down parabola on a chart referring to a theoretical optimal tax rate that will maximize government revenues. The theory behind the Laffer curve states that there is a certain point, known as T*, at which a government collects the greatest possible amount in taxes. If taxes are lower than T*, the government collects less because taxpayers are not required to pay. If it is higher than T*, people have an incentive to work less because more of their money goes to the government and, as a result, the government collects less. Economists disagree about whether the Laffer curve is true, but even supporters agree that T* is only an approximation. Fig. 109 Laffer curve. Laffer curve a curve depicting the possible relationship between INCOME TAX rates and total TAX revenue received by the government. Fig. 109 shows a typical Laffer curve. As tax rates per pound of income are raised by the government, total tax revenue, or yield, initially increases. If tax rate is increased beyond OR, however, then this higher tax rate has a disincentive effect so that fewer people will offer themselves for employment (see POVERTY TRAP) and existing workers will not be inclined to work overtime. The result is that the tax base declines and government tax receipts fall at higher tax rates. The possible Laffer curve relationship has been used by governments in recent years as a justification for cuts in tax rate as part of a programme of work incentives (see SUPPLY-SIDE ECONOMICS).Laffer curve
Words related to Laffer curvenoun a graph purporting to show the relation between tax rates and government incomeRelated Words |