How does increase in tax rate affect the Laffer curve?

The Laffer Curve is “inverted U”. As the tax rate starts from 0% and increases, the Laffer Curve moves in an upward slope till it reaches a point of optimal value. As the tax rate increases further, the Laffer curve moves in downward slope direction, indicating decrease in tax revenue. You can read about the Taxation System in India – Types, GST, VAT, Objectives, Limitation, Laffer Curve in the given link.

Further readings:

  1. Global Minimum Corporate Tax – Minimum tax rate proposed by the G7
  2. Base Erosion and Profit Sharing – Strategies used by Multinational Companies

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