
Why Zynga Should Worry About the Laffer Curve - epi0Bauqu
http://www.byrnehobart.com/blog/why-zynga-should-worry-about-the-laffer-curve/
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Locke1689
I'm not quite sure what the author is trying to say about the Laffer curve,
but I'm not certain it's correct. This paragraph is very confused:

 _The Laffer Curve normally describes government revenues compared to marginal
tax rates. It’s a curve because, given a sufficiently high tax rate, the
incentive to work, report income, or live in a particular country declines.
This leads to the argument that lower taxes are net beneficial: if we’re past
the peak, they’ll raise government revenue, but even if we’re not, they can
produce economic growth._

I think what he means to say is that the Laffer curve describes government
revenue versus tax rate. That is, it is not that at a certain tax point the
incentive to produce taxable revenue in that country decreases -- this happens
at any increase in tax rate. Rather, the argument is that at a certain point
the disincentive to create taxable income is high enough to meet the amount
gathered in taxation. At any point beyond this point, the disincentive is
actually higher than the tax rate, causing the government to acquire _less_
revenue than it would at a lower tax rate (because the decrease in taxable
income produced is higher than the revenue at the increased marginal tax
rate). I think the author understood this (the rest of the argument seems
cogent), but I just felt that paragraph was a little unclear.

