Laffer curve

Laffer curve definition - business

Laffer curve

Graphical representation of economist Robert Laffer's theory about the effect of rising tax rates on tax revenues. The curve is shaped like a mound and depicts rising tax rates initially resulting in rising revenues, but at some point additional rate increases cause a decline in revenues. If the curve depicts reality, a taxing authority can increase tax revenues by reducing high (but not low) tax rates.

The American Heritage® Dictionary of Business Terms Copyright © 2009 by Houghton Mifflin Harcourt Publishing Company. Published by Houghton Mifflin Harcourt Publishing Company. All rights reserved.

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