The ___ Curve illustrates the theoretical relationship between tax rates and total tax revenue, suggesting that beyond a certain optimal point, excessively high tax rates will actually reduce total revenue by discouraging work and encouraging evasion.
- Skewflation
- Laffer
- Okun's
- India Debt Resolution Company Ltd (IDRCL)
Answer: Laffer
Arthur Laffer's famous curve starts at zero revenue (0% tax rate), rises to a peak (the revenue-maximizing rate), and then slopes back down to zero (at a 100% tax rate, no one would work in the formal economy). It is a foundational concept in supply-side economics, arguing that sometimes cutting tax rates can paradoxically increase total government revenue by stimulating massive economic activity.