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Visual Representation of Laffer Curve Factoring in Implications of Capital Outflow

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  • Maria O. Kakaulina

Abstract

The article examines the problem of Laffer curve visualization. The purpose of the article is to propose a visual representation of the curve that takes into account the effects of capital outflow. The following research methods were used in the course of the research: historical method, comparative and critical analysis, graphical method. The author analyzes existing methods of the graphical representation of the curve drawin upon the interpretation of the original theoretical assumptions used for building a coordinate plane and taking into account additional factors (inflation, underground economy etc.). The author defines conditions for capital outflow and, as a result, for tax migration. The author proposes her own interpretation of the term “tax migration”, listing the key reasons for its occurrence. A variant of Laffer curve visualization in different coordinate planes has been developed, factoring in tax migration. The obtained results made it possible to establish a range of permissible changes to tax rates within which government tax revenue increases. The time frame in which tax revenue grows is different, depending on the dynamics of the tax rates.

Suggested Citation

  • Maria O. Kakaulina, 2017. "Visual Representation of Laffer Curve Factoring in Implications of Capital Outflow," Journal of Tax Reform, Graduate School of Economics and Management, Ural Federal University, vol. 3(2), pages 103-114.
    • Handle: RePEc:aiy:jnljtr:v:3:y:2017:i:2:p:103-114
    DOI: http://dx.doi.org/10.15826/jtr.2017.3.2.034
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    References listed on IDEAS

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    1. Zsolt Becsi, 2000. "The shifty Laffer curve," Economic Review, Federal Reserve Bank of Atlanta, vol. 85(Q3), pages 53-64.
    2. David Henderson, 1981. "Limitations of the Laffer Curve as a Justification for Tax Cuts," Cato Journal, Cato Journal, Cato Institute, vol. 1(1), pages 45-52, Spring.
    3. Buchanan, James M & Lee, Dwight R, 1982. "Politics, Time, and the Laffer Curve," Journal of Political Economy, University of Chicago Press, vol. 90(4), pages 816-819, August.
    4. Arthur Laffer & David Meiselman, 1975. "The Phenomenon of Worldwide Inflation," Books, American Enterprise Institute, number 725613, September.
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    1. Dwi Orbaningsih & Agus Eko Sujianto, 2022. "The Impact of Tax Revenue on Economic Growth: Evidence from Indonesia," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 6(5), pages 693-697, May.

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