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Politics : Formerly About Advanced Micro Devices

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To: bentway who wrote (788574)	6/8/2014 4:08:44 PM
From: i-node	Read Replies (3) of 1575627

I don't think you understand the concept. The maximum on Laffer Curve is not at 50%. And in fact, as the article pointed out there is no reason to assume it is a second-order curve, and it wouldn't be -- after all, we have various tax rates for different kinds of income, we have deductions, we have tax preference items and various restrictions like the "At-risk" limitation. All these add complexity to the idea. But the idea is intact -- there is some point beyond which raising taxes is counterproductive, and the same is true of some point below which it is counterproductive. That is not to say the maximum is "optimal" -- because there are unquantified aspects such as individual freedoms, the long-term attraction of capital, etc. In addition, we have high corporate income taxes to consider. The Laffer Curve was never intended, as presented by Laffer, to be a graph representing a precise tax policy. I would point out that there has been some scholarly work on trying to fit equations to the curve. I don't know that any of them are meaningful, but those I looked at a few years ago suggested the maximum occurred with rates lower than we now have.

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