Investor Glossary-laffer curveInvestor Glossary-laffer curveInvestor Glossary-laffer curveInvestor Glossary-laffer curveInsightful stock market charts - Click here
investor
Categories    # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Laffer Curve

The HTML to link to this page
 

The Laffer Curve is a mathematical shape that shows the relationship between tax rates and the revenue governments collect from those taxes. The Laffer Curve is shaped like an upside down U. The Laffer Curve is not fixed, however. The Laffer Curve shows that as tax rates rise, tax revenues increase. They reach a critical high point, called T*, where the maximum amount of tax revenue is reached for the maximum tax rates possible. After this point, both tax rates and revenue drop. The T* location suggests that at this point, people become increasingly unwilling to pay taxes. The location of the T* point along the Laffer Curve varies according to economic conditions. Economist Arthur Laffer invented the Laffer Curve.



Rate this Laffer Curve definition...

Learn about investing with the Investor Glossary Term of the Day


Click here for insightful stock market charts. Where is the market headed? The answer may surprise you. Find out
with the exclusive & Barron's recommended charts of Chart of the Day.


Popular Terms: Key Rate Duration, EBITDA, phantom income, debt service coverage, inflation, liquidity ratio, wholly-owned subsidiary, limit order, Zero Cost Collar, FTSE, LIBOR, required rate of return, covered put, 401a, class C shares, diluted share, annual return, APR, stock market close, VIX, current ratio, labor relations, 144a, ex-dividend date, 1035 exchange, cancelled check, per diem, implied volatility, real GDP, minority interest, margin rate, command economy, ex-dividend, quality assurance, irrevocable trust, risk management, in escrow, reverse mortgage, retained earnings, deferred tax, dividends payable, average price per share, option premium, balance sheet, open position, 1031 exchange, stock split, FICO score, deferred revenue


Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
Home | Term of the Day | Suggest a Term | Chart of the Day | Dogs of the Dow
©2004-2015 Investor Glossary - All rights reserved - Terms of Use