Author Question: What are the origins of the Laffer curve, and why is it relevant to a discussion of government ... (Read 128 times)

clmills979 · **on:** Jul 9, 2018

What are the origins of the Laffer curve, and why is it relevant to a discussion of government revenues? How does this relate to the theory of supply-side economics, and should efficiency matter more than fairness?

What will be an ideal response?

Question 2

In which region of the country are most of the states that are considered to be dominated by a few interest groups?

a. Northeast
b. South
c. Midwest
d. Far West

abctaiwan · **Reply #1 on:** Jul 9, 2018

Answer to Question 1

An ideal response will:
1, Note that it was Arthur Laffer who developed the idea that you do not always get more tax revenues by raising taxes.
2, Explain how Laffer demonstrated that as tax rates go up, revenues go down because high tax rates reduce the incentives to work by demonstrating that there is a rate of taxation above which revenues will drop.
3, Explain the connection to supply-side economics, which argues that due to the Laffer curve, government can increase revenues by cutting taxes, which stimulates investment, leading to more employment and higher government revenues.
4, Provide a strong argument with respect to the importance of either efficiency or fairness in the assessment of tax rates in the United States.
5, Provide a clear and concise conclusion.

Answer to Question 2

Answer: b