What is the shape of a Laffer curve?

Inverted-U is the typical shape of a Laffer curve. As the tax rate increases beyond the optimal point, which is located at the peak of the Laffer curve, the Laffer curve starts moving in a downward slope direction, indicating a decrease in tax revenue. You can read about the Taxation System in India – Types, GST, VAT, Objectives, Limitation, Laffer Curve in the given link.

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. 

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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