laffer curve

• According to the lecture, what is the "Laffer Curve" a good argument to question?

  Whether higher income tax translates to higher tax revenue
• Who introduced the Laffer Curve idea?

  Arthur Laffer
• According to Arthur Laffer, what can extra tax revenue be used for?

  Redistributing income, funding public services
• According to Arthur Laffer, up to what point can increasing taxes help redistribute wealth and fund public services?

  Up to an efficient tax rate
• What did Arthur Laffer say would happen if taxes increase beyond the efficient tax rate?

  Tax revenue collected will decrease
• What relationship does the Laffer Curve map?

  Tax rates and tax revenue collected
• According to the Laffer Curve, what is the significance of the point where tax revenue collected is at its maximum?

  It is the efficient tax rate
• On the Laffer Curve diagram, what letter represents the efficient tax rate?

  T
• According to the Laffer Curve, what happens if the government increases taxes before reaching the efficient tax rate?

  Tax revenue collected will increase
• What does the Laffer Curve say will happen if the government increases taxes beyond the efficient tax rate (T)?

  Tax revenue will decrease
• What is one reason the Laffer Curve argues that tax revenue decreases beyond the efficient tax rate?

  Higher tax rates bring disincentives
• What may workers do when faced with very high income tax rates, according to the Laffer Curve?

  Substitute work for leisure
• How do high income tax rates affect entrepreneurs, according to the Laffer Curve?


  They take less risks
• According to the Laffer Curve, what is the end result of disincentivizing work and higher productivity?

  Lower tax revenue being collected
• What is another argument presented by the Laffer Curve for why tax revenue decreases beyond the efficient tax rate?

  Emigration of highly skilled workers
• According to the Laffer Curve, what is incentivized when income taxes are really high?

  Highly skilled workers emigrating
• According to the Laffer Curve, who are the biggest taxpayers to the government?

  Highly skilled workers and entrepreneurs
• According to the Laffer Curve, what happens if the highest income earners and most productive workers leave a country due to high taxes?

  A big fall in tax revenue
• What activities are promoted by higher tax rates, according to the Laffer Curve?

  Tax evasion and tax avoidance
• Which of the following is illegal?

  Tax evasion
• What is the difference between tax evasion and tax avoidance?

  Evasion is illegal, avoidance is legal
• According to the Laffer Curve, what happens when the government taxes too highly?

  Tax evasion and avoidance increases
• According to the Laffer Curve, when do disincentives, emigration, and tax evasion become prominent?

  Beyond the efficient tax level
• When writing essays about government tax increases, what argument can be used to critique the idea that increased taxes always lead to increased revenue?

  The Laffer Curve argument