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No. of Recommendations: 1
Lo the Laffer curve strike again. It struck recently in California as well.

BTW, I saw a calculation the other day that the theoretical peak of the Laffer curve is at 33% of income, for taxes from all sources.


But there's also the issue that tax rates and structures affects the long-term growth rate. Some years ago I read of a study (which of course I can't find again) reaching the tentative conclusion* that in the long run a 20% flat-rate income tax with no zero bracket produces the most revenue in the long run - that while a higher rate produces more revenue in the first few years, it also depresses growth so there is less revenue later, and having a zero-bracket amount reduces revenue by more than you would expect because it creates opportunities for tax avoidance.
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