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Laffer Curve
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📈 Economics
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Tax Base Elasticity
Economy Scale
Key Concepts
• At 0% and 100% tax rates, government revenue is zero
• The revenue-maximising rate t* = 100 ÷ (1 + elasticity)
• Higher elasticity means economic activity responds more to taxes — lowering t*
•
Supply-side argument:
if current rate > t*, cutting taxes raises revenue
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