California has higher income taxes than any other state in the united states. As a result, many business owners, like elon musk and joe rogan, have moved their enterprises to states with lower state income taxes. As a result, its likely that california will start to experience less tax revenue even as they increase tax rates. What concept in economics does this best illustrate?.
The Laffer curve is concept in economics does this best illustrate .
What is Laffer effect?
The rise in tax revenue brought on by lower tax burdens is known as the Laffer effect, which is named after economist
Arthur Laffer who first proposed it during debates in support of US President Ford's tax cuts in 1974–1977.
What is a sample of a Laffer curve?
According to the Laffer curve research, when the tax rate is increased to 100%, there is no impact on government revenue.
This is because it results in no additional creation or labor. Therefore, raising the tax rate further will result in a drop in tax revenue, which the government cannot afford.
