The main purpose of the Laffer curve is to crudely suggest

A) how government can increase tax revenues by increasing tax rates.
B) that a tax cut will lead to an increase in GDP.
C) the disincentive effects of high marginal tax rates.
D) the tax rate which will yield maximum revenue for the government.

Laffer Curve

A theoretical representation of the relationship between tax rates and government revenue, suggesting there is an optimal tax rate that maximizes revenue.

Marginal Tax Rates

A rephrased definition: The percentage of tax applied to your income for each tax bracket in which you qualify, essentially defining how much tax you pay on an incremental dollar of earnings.

Tax Revenues

Tax revenues are the income that is gained by governments through taxation, crucial for funding public services and governmental operations.