Wednesday, July 13, 2011

When a firm raises prices, does that automatically mean that they make more money?

This is the Laffer curve argument. Even among economists who accept it in theory, nearly all agree that we are on the lower half of the curve with tax rates well below the point of maximum revenue. Many economists don't accept it at all and hold that revenue will increase until taxes reach a prohibitively high number, over 90% for top earners.

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