Macro Foundations · advanced
What moves on the Laffer Curve diagram
Harder avoidance flattens the behavioural response to tax rates, raising revenue at every rate and moving the revenue-maximising rate higher.
With easy avoidance, the revenue hill bends over early: people dodge before rates get high.
Loopholes close and enforcement tightens.
The whole curve lifts and its peak shifts right: every rate now collects more, and higher rates stay productive for longer.
Same statutory rate, more revenue, purely from a stronger base.
Examiners ask this as: tax crackdown, close loopholes, compliance, evasion, ato audit.
Other scenarios on Laffer Curve