What Is Supply Side Economics?
Supply-side economics asks how marginal rates change what people choose to do: work, save, invest.
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1.What is a marginal tax rate?
Supply-side economics asks how marginal rates change what people choose to do: work, save, invest.
2.Marge earns 100,000 and the rate is 40 percent. What does she pay?
So each pays 40,000 and keeps 60,000.
3.The rate falls to 30 percent. What does Marge pay on 100,000, and Leo on 140,000?
Tax equals rate times base; the base is the profit the rate applies to.
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Sources (6)
- Gwartney, J. D.: Supply-Side Economics, in: The Concise Encyclopedia of Economics, Econlib (Liberty Fund)
- Wanniski, J.: Taxes, Revenues, and the "Laffer Curve", The Public Interest, Winter 1978
- Congressional Budget Office: Analyzing the Economic and Budgetary Effects of a 10 Percent Cut in Federal Income Tax Rates (December 2005)
- Trabandt, M., Uhlig, H.: The Laffer Curve Revisited, Journal of Monetary Economics 58(4), 305-327 (2011)
- Holik, D.: Individual Income Tax Rates, 1982, Statistics of Income Bulletin, IRS
- Eigene Rechnung: zwei Cafes, Steuer auf Gewinn (Rechenbeispiel)
Education only. Not financial advice.