The aim of this paper is to look for the presence of the Laffer curve in a non-Leviathan state using tax rates of 30%, 50% and 70%. We gave the players the opportunity to choose their labour supply both under a Welfare – State scenario and a State – of – Nature contract. The main evidence is that a tax rate of 70% is extremely unpopular and significantly decreases subjects’ labour supply without any benefit on the tax revenue. On the other hand, an increase of the tax rate from 30% to 50% does not reduce the per capita labour supply while increasing the tax revenue.
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Article provided by Economics Bulletin in its journal Economics Bulletin.
Find related papers by JEL classification: C9 - Mathematical and Quantitative Methods - - Design of Experiments H2 - Public Economics - - Taxation, Subsidies, and Revenue