Optimal tax the optimum. Stipulating this condition results in the following formula for the optimal top tax rate, if incomes are Pareto distributed: formula_1 where: Empirical estimation of the parameters of this equation suggests that the revenue-maximising top tax rate is between approximately 50% and 80%, although this estimate neglects long-run behavioural responses, which would imply higher elasticities and a lower optimal tax rate. Saez's analysis can also be generalised to tax rates other than the top rate. In the late 1970s, Arthur Laffer developed the Laffer curve, which demonstrates that there are two effects of changing tax rates: an arithmetic effect—if
The J Curve (book) The J Curve (book) The J Curve: A New Way to Understand Why Nations Rise and Fall (Simon & Schuster: 2006) is a book by political scientist Ian Bremmer. It was named a "Book of the Year" in 2006 by "The Economist". Bremmer's J Curve describes the relationship between a country's openness and its stability; focusing on the notion that while many countries are stable because they are open (the United States, France, Japan), others are stable because they are closed (North Korea, Cuba, Iraq under Saddam Hussein). According to Bremmer, a government's motivations differ dramatically depending on where they