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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?.



Answer :

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.

Learn more about Laffer curve

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