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Economics
Laffer Curve
The idea that if you raise taxes too high, people work less or find ways around them, so total tax revenue can actually fall.
The Laffer Curve shows there's a sweet spot for tax rates. Too low and the government starves; too high and people stop producing as much. It's a favorite idea among supply-side economists.It's like a lemonade stand — charge $1 per cup and you sell tons; charge $10 and almost nobody buys, so you make less money overall.
Real world: In the 1980s, the U.S. cut the top income tax rate from 70% to 28% and tax revenue eventually went up because people worked and invested more.
💡 The Laffer Curve reminds lawmakers that you can't just keep raising rates forever and expect more money — there's a point where it backfires.