Day 33 of 365
February 2
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Economics The Laffer Curve
The Laffer Curve illustrates that tax revenue increases with tax rates up to a point, but beyond that optimal rate, revenue decreases because high taxes discourage economic activity. While this concept seems logical, the curve's actual shape and the optimal tax rate are hotly debated. The idea was famously sketched on a napkin in 1974 and influenced Reagan-era tax policy.
💡 Did you know?
The concept behind the Laffer Curve was actually understood by 14th-century Islamic scholar Ibn Khaldun, 600 years earlier!
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