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| The Laffer curve plots total long-term tax revenues against the rate of tax.
| | Any fund or investment company (in the case of a unit trust or Fonds Commun de Placement) that is legally established outside the country of the investor. |
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| It illustrates the observation that when tax rates are raised too high, tax revenues (tax yield) will decline.
| | Popular offshore fund locations are Bermuda, Luxembourg, Ireland and the Channel Islands. |
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| This is because tax revenues are a product of the rate of tax, and the tax base.
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| When tax rates are higher, the tax base tends to decline.
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| In the extreme case of a 100% tax rate, the tax revenue is likely to be zero, because there is no economic incentive for undertaking the activities to earn taxable income.
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| However, if tax rates are very low, this will also erode tax revenues.
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| For example, if tax rates are 0%, then tax revenue will of course be zero.
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| If the purpose of setting tax rates were to maximise long-term tax revenues, there would be a theoretically 'optimal' rate of tax, somewhere between 0% and 100%, that would maximise total tax revenues.
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| == See also == | | == See also == |
| * [[Phillips curve]] | | * [[Fonds Commun de Placement]] |
| * [[Reaganomics]]
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| * [[Tax yield]]
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| * [[Tax rate]]
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| * [[Tax base]]
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| * [[Trussonomics]]
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| [[Category:Accounting,_tax_and_regulation]]
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Revision as of 11:05, 22 June 2016
Any fund or investment company (in the case of a unit trust or Fonds Commun de Placement) that is legally established outside the country of the investor.
Popular offshore fund locations are Bermuda, Luxembourg, Ireland and the Channel Islands.
See also
