Indirect tax revenue curves-consumer demand models point of view. Particular case: asymptotic zero demand models

Abstract

The Laffer curve is undoubtedly the most popular tax revenue curve. Many critics claim that the Laffer curve does not describe any real economic processes, but only represents an “ideology”. The author of the present paper shows that the Laffer curve, and, in general, the tax revenue curves, have a very strong justification and that such curves may be derived from the general assumptions concerning consumer behaviour. The author presents tax revenue curves derived from three types of functions that show the relationship between demand and price: the power function, exponential function and logistic function. The author also presents the formulas (derived from these tax revenue curves) that concern the optimal tax rate. The article shows that tax revenue curves are only exceptionally similar to the classic (reversed Ushaped) Laffer curve.tax revenue curve, consumer demand, optimal tax rate, the Laffer curve krzywa Laffera