At what point do tax rates net lower revenue for teh gubment?

[Tx Redneck]

[Geor!]

I did some research on this whole tax argument and found that no matter the rate, high or low, the revenue taken in by the government stayed between 18-20% of GDP, which is really what we're concerned about, right?

[Dlachance]

Look at what the effects of raising corporate and personal inome taxes for high earners will do in this current economy. It will lead to lower revenue, and a cause for increased taxes. Then, we get to become France in a nutshell.

[slow99]

I'm guessing that vid is on the Laffer curve?

[mikec]

In economics, the term Laffer curve refers to a hypothetical representation of the relationship between government revenue raised by taxation and all possible rates of taxation. It is used[by whom?] to illustrate the concept of taxable income elasticity – that taxable income will change in response to changes in the rate of taxation. The Laffer curve postulates that no tax revenue will be raised at the extreme tax rates of 0% and 100%. If both a 0% and 100% rate of taxation generate no revenue, but some intermediate tax rate generates some tax revenue, it follows that there must exist at least one rate where tax revenue would be a non-zero maximum. The Laffer curve is typically represented as a graph which starts at 0% tax with zero revenue, rises to a maximum rate of revenue at an intermediate rate of taxation, and then falls again to zero revenue at a 100% tax rate. The actual existence and shape of the curve is uncertain and disputed.[3]

One potential result of the Laffer curve is that increasing tax rates beyond a certain point will be counterproductive for raising further tax revenue. A hypothetical Laffer curve for any given economy can only be estimated and such estimates are controversial. The New Palgrave Dictionary of Economics reports that estimates of revenue-maximizing tax rates have varied widely, with a mid-range of around 70%.[4]

Some people[who?] associate the Laffer curve with supply-side economics, where its use in debates over rates of taxation has also been controversial.[citation needed] The term Laffer curve was coined by journalist Jude Wanniski in the 1970s, with Wanniski naming the curve after an idea sketched on a napkin in a restaurant by Arthur Laffer. Laffer later pointed out that the concept was not original, noting similar ideas in the writings of both 14th century Muslim philosopher Ibn Khaldun (who discussed the idea in his 1377 Muqaddimah)[5] and John Maynard Keynes.[1]

[Downs]

If I'm a large company with ass loads of money and you tell me you are raising taxes on me I'd be checking to see if moving to a state (or country) with lower taxes will make sense money wise.

[aggie97]

If I'm a large company with ass loads of money and you tell me you are raising taxes on me I'd be checking to see if moving to a state (or country) with lower taxes will make sense money wise.

research the number of ex-patriots from Europe who leave after paying 50% or more in taxes.....so ass-hats in Greece get a gubm't check every month.

We are headed that direction.

[Jimbo]

The point of diminishing returns exists for all things.