The Error of the Laffer Curve

The perfect semi-circle of the Laffer Curve(Googgle Laffer Curve, you will get a wealth of information) has always offended the Author, who realized innately the Economy could not operate along such a Curve. He just finished reading an article by a famous author who epitomed the Laffer Curve, and knew he had to respond; no mention of the article to avoid conflict, and because this theory must be analyzed mathematically which will make the Author a laughingstock.

The Laffer Curve could not possibly be a perfect semi-circle, but must resemble a plateau with width of 7-8% real tax rate across the Top; so the infamous T* cannot exist. The plateau along the Top must resemble a sine wave, of magnitude of Labor Supply increase minus the incremental real tax rate (LSi-TRi), with TRi being the maximum depth of the wave below centerline, and LSi being the maximum height above centerline. A decreasing Labor Supply would provide a depth below centerline of LSd+TRi. The width of the plateau would be equal to the percentage increase in the Labor Supply plus the percentage cost of Government debt(LSi+GDi).

Now where do We place the optimal Tax rate, the famous T*. The answer states it must be somewhere along the sine wave plateau. The minimum real Tax rate of said plateau must be Government expenditures as percentage of the Economy paid by Tax revenues plus interest rate on added Government debt incurred but total Government expenditures (GEt+GDi). The interesting element here is that Interest rate paid on Government Debt(GDi) must equal the percentage difference between GE-GEt. This would signify as Tax revenues (TR) fall below Government expenditures (GE-TR)-LSi=GDi in percentage terms of the Economy.

Conclusion:
We find the Laffer Curve must be a plateau of estimable width, with T* within the sine wave which makes up the plateau. Further study would suggest T* is actually along the centerline of the sine wave, and may be indicated by a break in the sine wave along the centerline. Note must also be made to make proper transfer of data from percentages to real Revenues magnitudes in precise locations, which the Author may not have highlighted. lgl