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To: Paladin2
I’m not sure the peak of your curve is an equilibrium point. It looks unstable to me.

It's because the Laffer curve is drawn upside down with respect to economic "energy". The peak is actually the lowest-energy state for the economy - tax revenue system. Reduce marginal rate from that point, and the tax revenue decreases, increasing the "energy state" of the government. Increase the marginal rate from that point, and it increases the "energy state" of the economy, which naturally works to decrease costs, reducing tax revenue.

Just an engineer's take.

82 posted on 03/14/2010 6:56:52 PM PDT by backwoods-engineer ("It is error alone which needs the support of government. Truth can stand by itself." --Jefferson)
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To: backwoods-engineer

Looks to me like it’s extremely difficult for the gov’t to stay at the max revenue point. OTOH, its makes it pretty clear which direction the gov’t should go if its not at the peak.


83 posted on 03/14/2010 7:14:30 PM PDT by Paladin2
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