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A new twist on the Laffer Curve

The Laffer Curve is a description of the theoretical optimum point of taxation rate on a population. It implies that there’s a ’sweet spot’ of taxation where the most income is generated for government coffers. Set the taxation rate too low and the government misses out on potential revenue. Set it too high and an increasing proportion of the population finds ways to avoid tax, moves abroad or simply works less because the extra effort isn’t worth the reduced extra reward. What the Laffer Curve doesn’t explicitly take into account is the effect on a population of the perceived morality of public spending. For example, while an argumentative person might perceive taxation to be nothing more than demanding...

posted on: May 28, 2009 | author: Alex