The Laffer curve shows how tax revenues change when the tax rate is either increased or decreased. Typically, it has an inverted-U shape.
The Laffer curve, popularised in 1974 by economist Arthur Laffer in a discussion with former U.S. President Gerald Ford, is often used to bolster the argument that high or increasing tax rates will not yield additional tax revenue because members of the workforce will opt to work less in such circumstances, substituting earned income with leisure. The curve supports the notion in supply-side economics that tax and regulatory burdens can impede growth.
