Laffer curve A graphical illustration of the argument that there exists an optimum rate of tax at which government tax revenue is maximized. The curve is named after the American economist Professor Arthur Laffer, who argued that the economy could be expanded without government budget deficits.
Lower taxes lead to lower prices, higher output and, therefore, higher government revenues.
This argument has yet to find full empirical justification. See supply-side economics . The Penguin Dictionary of Economics 2. Supply-Side Economics Bloomsbury Guide to Human Thought 3. Laffer Curve Bloomsbury Guide to Human Thought 5.