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Limitations of the Laffer Curve as a Justification for Tax Cuts

Author

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  • David Henderson

Abstract

Professor Laffer’s paper’ leads me to ask four questions, which I shall address in turn: 1, Is the Laffer curve an accurate depiction of economic reality? 2. Are we in a prohibitive region of the Laffer curve, that is, a region in which a tax rate cut would increase tax revenues? 3. If we are not in a prohibitive region, could we cut income tax rates and get the positive output effects without also cutting government spending? 4. Should we let our answer to the second and third questions determine our position on cutting taxes?...

Suggested Citation

  • David Henderson, 1981. "Limitations of the Laffer Curve as a Justification for Tax Cuts," Cato Journal, Cato Journal, Cato Institute, vol. 1(1), pages 45-52, Spring.
  • Handle: RePEc:cto:journl:v:1:y:1981:i:1:p:45-52
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    Cited by:

    1. Hüseyin ŞEN & Zeynep Burcu BULUT-ÇEVIK, 2021. "The Revenue-Maximizing Corporate Income Tax Rate for Turkey," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(1), pages 122-142, December.
    2. Maria O. Kakaulina, 2017. "Visual Representation of Laffer Curve Factoring in Implications of Capital Outflow," Journal of Tax Reform, Graduate School of Economics and Management, Ural Federal University, vol. 3(2), pages 103-114.
    3. David R. Henderson, 1989. "Are We All Supply‐Siders Now?," Contemporary Economic Policy, Western Economic Association International, vol. 7(4), pages 116-128, October.
    4. Tchai Tavor & Limor Dina Gonen & Uriel Spiegel, 2021. "Reservations on the classical Laffer curve," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 34(4), pages 479-493, December.
    5. Şen, Hüseyin & Bulut-Çevik, Zeynep Burcu & Kaya, Ayşe, 2017. "The Khaldun-Laffer Curve Revisited: A Personal Income Tax-Based Analysis for Turkey," MPRA Paper 78850, University Library of Munich, Germany, revised 27 Apr 2017.

    More about this item

    Keywords

    Government; taxation; revenue; tax cuts;
    All these keywords.

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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