Re: Taxation system

John Carr (
Mon, 27 Jul 1992 13:39 EST

> > Ever heard of the Laffer curve ?

> Nope, can't say that I have. Care to elaborate?

After I sent this, I suddenly realized that this curve probably had something
to do with the old Swedish tax system, which was basically, those people making
over $100,000 would be taxed 100% of their income (actually, I think it was
higher than that, 110% if memory serves me). Of course, what happened in
Sweden is that production went down and with it tax revenue.

> The Laffer (named after the economist Arthur Laffer) curve is a plot
> of tax revenue versus tax rates. If your tax rates are 0%, your
> revenues will of course be 0 too. If your tax rates are 100%, people
> won't work (why bother if you keep it all in the end anyway ?), so
> your revenues will be 0 too. Somewhere in between you'll have some
> revenues (hopefully), so in the simplest case the Laffer curve looks
> like this (as I trust not all recipients of this message run Display
> Postscript, I'll have to use ASCII....).

Ahh, but this all deals with work and I guess I was looking at it as taxes on
commodities. By having high taxes, you keep the markets from operating within
the region. Of course, you would never make any money, but you would force
people to leave. Which I imagine is perfectly alright. ;-) Warlords should
be able to terrorize the populace anyway they choose.

[ nice ascii graph removed ]

> So in some regions you actually can _increase_ tax revenue by
> lowering taxes. This is what prevents (wise) governments from jacking
> up the tax rates indefinitely.


John Carr

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