Source: Adam Smith Institute
by Madsen Pirie
“The Laffer Curve is a concept in economics that illustrates a theoretical relationship between tax rates and tax revenue. The basic idea is that there is a tax rate between 0% and 100% that maximizes government revenue. The case for the Laffer Curve rests on both logical reasoning and empirical observations, though there is, not surprisingly, significant debate about its policy implications. The case for it in theoretical logic rests on two things. Zero tax yields zero revenue. At a 0% tax rate, the government collects no revenue. This is self-evident. A 100% tax also yields zero revenue. If all income is taxed away, individuals and businesses have no incentive to work, invest, or earn income legally. Between no yield at 0% tax and no yield at 100% tax, there is a curve, and some tax rate must maximize revenue, hence the Laffer Curve.” (06/05/25)
https://www.adamsmith.org/blog/the-laffer-curve-is-a-fact-not-a-theory