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Approximating the Marginal Revenue Maximizing Point: A Brief Analysis Employing the Laffer Curve

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  • Jack Lum

    (Lake Travis High School, USA.)

Abstract

For centuries governments across the world have taxed their people. Different rates are used; however, the ultimate goal is to generate the most revenue. This goal has led governments to raise taxes, as theoretically the higher the tax, the more revenue collected. This was proven to be true only to a certain extent by Arthur Laffer in 1970s. In this paper, I will discuss from an economic standpoint why- regardless of political ideology- taxes rates should not exceed 33 percent.

Suggested Citation

  • Jack Lum, 2018. "Approximating the Marginal Revenue Maximizing Point: A Brief Analysis Employing the Laffer Curve," Bulletin of Business and Economics (BBE), Research Foundation for Humanity (RFH), vol. 7(3), pages 94-96, September.
    • Handle: RePEc:rfh:bbejor:v:7:y:2018:i:3:p:94-96
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    References listed on IDEAS

    as
    1. Christina D. Romer & David H. Romer, 2010. "The Macroeconomic Effects of Tax Changes: Estimates Based on a New Measure of Fiscal Shocks," American Economic Review, American Economic Association, vol. 100(3), pages 763-801, June.
    2. Emmanuel Saez & Stefanie Stantcheva, 2016. "Generalized Social Marginal Welfare Weights for Optimal Tax Theory," American Economic Review, American Economic Association, vol. 106(1), pages 24-45, January.
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    More about this item

    Keywords

    taxation; Laffer curve; optimal taxation; tax efficiency;
    All these keywords.

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation

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