Laffer Curve

Economics Financial Terms Dictionary

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American economist Arthur Laffer in 1974 developed the normal distribution curve, known as the Laffer curve.

The Laffer Curve shows the relationship between tax rates and total tax receipts.
The Laffer Curve was used as the basis for tax cuts in the 1980s under the Reagan administration.
Critics argue that the Laffer curve is too simplistic and uses a flat tax rate.