Laffer curve
1
9.9
- noun
- /ˈlæfər kɜrv/
- Specialized
:
curva de Laffer
- But that is because for most of U.S. history, we haven't had marginal income tax rates high enough to worry about the Laffer curve theory.
Examples
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In economic discussions, the Laffer curve is often referenced to explain the balance between tax rates and revenue generation.
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We're not at the point of the Laffer curve where it would generate less yet.
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Or, in terms of the Laffer curve, it would mean that the tax cuts paid for themselves.
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If the scope of the programs covered by the taxation system changes, the Laffer curve's shape will change.
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Now the Laffer curve has been debated endlessly ever since.
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The Laffer curve illustrates how tax rates can influence government revenue, showing an optimal rate that maximizes income.
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Understanding the Laffer curve helps policymakers determine how much to tax without discouraging economic growth.
Surface Forms
Morphology
Laffer + curve
The element 'Laffer' is an eponym (a proper name) that provides no semantic cue about taxes or revenue, while 'curve' only signals a graphical shape; together they do not allow a B1 learner to infer the specific economic relationship described. This is a technical, discipline-specific term (an economist's eponym for a particular tax–revenue relationship), so the meaning is not derivable from the constituents.
Etymology
Laffer curve gets its name from economist Arthur Laffer, who once drew a simple hump-shaped curve on a napkin to show that as the 'tax rate' rises, government 'revenue' goes up at first but then falls because people work or invest less. That's why the name now means the graph that shows the point where tax rates bring the most money for the government.