Why do governments tax beyond the Laffer maxium? You have probably read about the California’s Amazon tax. Amazon said it would flee the tax, promptly did so, and so, predictably, instead of gaining two hundred million, the state lost taxes on something like one hundred and fifty million of income.
Tag: Laffer maximum
Laffer curve
If the government taxes 0% of GDP, it will not get any money. If it attempts to tax 100% of GDP it will not get any money either, since there will be no above ground wealth. So somewhere between 0% and 100% is the tax that maximizes revenue. Genghis Kahn and Raffles believed that the tax that maximizes revenue is quite low, close to 0%. Today’s politician’s believe it is …