Effect of tax - depending on elasticity - Economics Help
Effect of tax - depending on elasticity - Economics Help
Mar 20, 2021
economicshelp.org
The Laffer Curve isn’t an ideological weapon—it’s just a model showing the relationship between tax rates and tax revenue. Imagine a graph: • The x-axis is the tax rate (0% → 100%). • The y-axis is total tax revenue collected by the government. At 0% tax, the government collects nothing—obviously. At 100% tax, the government also collects very little or nothing—because people have no incentive to work or invest if the government takes everything. Somewhere in between, there’s a sweet spot where
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