AP MacroeconomicsPublic Finance & Taxation
Laffer Curve
The Laffer curve shows that tax revenue rises with the tax rate up to a point, then falls as high rates discourage work and investment.
It implies both a 0% and a 100% rate raise no revenue, so a revenue-maximizing rate lies in between. Supply-siders use it to argue some tax cuts can raise revenue, though where the peak lies is debated.