6. “Is There an ‘Anomalous’ Section of the Laffer Curve?”


Abstract: When an economy is at the upper part of the Laffer curve, a reduction in tax rates will, somewhat paradoxically, lead to a rise in the amount of money, both relatively and absolutely, the taxpayer will retain, but, also, to an increase in government revenues collected. The former result is a welcome one, from the libertarian perspective, not so the latter. Does this example exhibit a slight anomaly for the free enterprise philosophy (a rare case when a reduction in statism does not lead, unambiguously, to benefits), or does it furnish a true conundrum. The present paper argues that both are true.