Download the BYJU'S Exam Prep App for free IAS preparation videos & tests - Download the BYJU'S Exam Prep App for free IAS preparation videos & tests -

What is the optimal tax rate Laffer Curve?

The Government tax revenue will be maximum at optimal tax rate represented in the Laffer Curve. If the tax rate reaches 100%, then it will be counterproductive, the Government will not gain maximum revenue at this percentage. You can read about the Taxation System in India – Types, GST, VAT, Objectives, Limitation, Laffer Curve in the given link.

The curve which analyses the impact of tax rates from 0% to 100% is known as Laffer Curve. The tax revenue will be zero at 0% of the laffer curve, as the percentage increases, the tax revenue also increases, but it will not be maximum at 100%, but at the optimal rate which is located at the top of the laffer curve, which looks like an “inverted U”.

Further readings:

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

Related Links

Black Money, Tax-Evasion & Tax-Avoidance

General Anti-Avoidance Rule (GAAR) – Anti Tax Avoidance Law in India

Previous Years Economics Mains Questions for UPSC General Studies Paper – 3

Economics Notes For UPSC Examination

Global Corporate Tax and India: RSTV- Big Picture

Topic-Wise GS 3 Questions for UPSC Mains

UPSC Mains General Studies Paper-III Strategy, Syllabus & Structure

CBDT – Central Board of Direct Taxes: Functions and Structure

Comments

Leave a Comment

Your Mobile number and Email id will not be published.

*

*