U.S. tariff policy has historically balanced competing goals—revenue, protection, and reciprocity. Policy priorities have shifted over time in response to changing economic and political conditions. Using a calibrated general equilibrium model, we illustrate these trade-offs through the lens of tariff Laffer curves. A 70 % tariff maximizes U.S. revenue only in the absence of retaliation; this optimum falls to 30 % with reciprocal tariffs. A unilateral 25 % tariff delivers the largest domestic consumption gains through favorable terms-of-trade effects, though these gains vanish under retaliation. Simulations also show that multilateral retaliatory tariffs can partially offset losses for Mexico and Canada—unless escalation triggers broader trade conflict. The 2018–19 tariff war further illustrates how targeted tariffs distort relative prices and cross-border resource allocation.

The aim of this article is to analyze the relationship between the corporate income tax rate and net tax revenues in Slovakia and the Czech Republic using the Laffer curve concept. Based on data on actual tax revenues and their discounting to net present value, a quadratic regression analysis was created that takes into account the assumed parabolic relationship between the tax rate and tax revenues. The optimal tax rate was identified as approximately 17.64% for Slovakia and 26.12% for the Czech Republic. The results confirm the nonlinear nature of the relationship and suggest that excessive tax increases can reduce business motivation, encourage tax optimization, and threaten the competitiveness of the economy. The analysis emphasizes the importance of optimizing tax policy not only to maximize government revenues, but also to support investment and long-term sustainable economic growth.

Salience and the Elasticity of Taxable Income: Evidence from Top-bracket Tax Reforms

Till the IRS Do Us Part: (Optimal) Taxation of Households

This study explores the impact of taxation on manufacturing sector output in Nigeria from 1994 to 2023, using the Autoregressive Distributed Lag (ARDL) bounds testing approach to uncover both short-run and long-run dynamics. Drawing on secondary data from the Central Bank of Nigeria, National Bureau of Statistics, and the Federal Inland Revenue Service, the analysis focuses on direct and indirect impact of taxation on manufacturing sector output using four key tax types: Petroleum Profit Tax (PPT), Company Income Tax (CIT), Value Added Tax (VAT), and Personal Income Tax (PIT). Anchored in the Laffer curve theorem which suggests a non-linear relationship between tax rates and economic performance, the study examines whether Nigeria’s tax policies have supported or hindered manufacturing sector’s growth. The findings reveal that PPT significantly boosts manufacturing output in both the short and long run, highlighting the developmental value of resource-based revenues. CIT shows a positive influence in the short run but turns negative and statistically insignificant in the long run, suggesting that prolonged high corporate taxes may discourage industrial growth. VAT and PIT, although showing some long-run influence, were not statistically significant. Based on these insights, the study recommends a rebalancing of tax policy especially optimizing petroleum profit tax utilization, reform corporate tax structure to reduce burdens, reassess the design and administration of value added tax and balancing personal income tax rates to safeguard demand and productivity. By blending empirical evidence with theoretical insight, this research adds to the fiscal policy discourse in developing economies and offers a valuable framework for rethinking Nigeria’s tax strategy in support of sustainable industrial development.

The theory of optimal taxation emphasizes that a tax system should reduce market inefficiencies and distortions. This paper examines the relationship between tax revenue and tax burden in Romania for 2006-2022 within the Laffer curve framework. A regression model was developed to estimate the coefficients of the parabola, which are then used to determine its vertex coordinates. The vertex represents the revenue-maximizing value of the tax burden. The relationship between tax burden and total tax revenues is analyzed over a specific period, so the vertex is the revenue-maximizing point within that context. Future conditions may change, and various factors (economic growth, policy changes, etc.) could influence the revenue-maximizing level. A value of the tax burden below the vertex value (a negative deviation) could be related to under-taxation. If the situation shows a positive deviation (above the vertex value), this could be related to over-taxation. The study offers insights into Romanian tax policy and its implications. An excessively high tax burden will increase avoidance behavior, resulting in lower tax revenues. A level that is too low may not generate enough revenue to finance public goods and services. The results could be used to create measures to improve revenue collection without discouraging economic activity.

Purpose The present study evaluates the sustainable fiscal policy, specifically applied to environmental taxes and their influence on the ecological footprint of Japan. Additionally, the study takes into account economic growth and energy consumption. Design/methodology/approach Using the Autoregressive Distributed Lag (ARDL) model, along with Dynamic Ordinary Least Squares (DOLS) as a robustness method within the time frame of 1995–2022, the existence of a cointegration and a long-term and short-term impact of sustainable fiscal policy, energy consumption, and economic growth on ecological footprint are validated. Findings Empirical analysis demonstrates the existence of a long-run relationship among sustainable fiscal policy, energy consumption, economic growth, and ecological footprint. The finding of an inverted N-shaped relationship between sustainable fiscal policy and ecological footprint suggests the existence of an Environmental Laffer Curve (ELC). In both the short run and the long run, energy consumption leads to greater ecological footprints. Correspondingly, economic growth is in line with the Environmental Kuznets Curve (EKC), showing that environmental degradation will first increase and then decrease over the long term. Practical implications It is important for policymakers to apply a gradual technique. At the first stage, the imposition of environmental taxes accompanied by investments in green infrastructure, tax reductions, and education programs can instantly lessen the ecological footprint. Eventually, the relaxing of fiscal tightness coupled with the support of private sector innovation and circular economy practices can hold the environmental benefits. Furthermore, energy conservation policies, the spread of renewable energy technologies, carbon pricing, and demand-side management are suggested to reduce the environmental effects associated with energy use. The economic policies should combine the use of regulatory and market-based instruments that are backed by awareness campaigns and international collaboration in order to foster sustainable development. Originality/value The study presents novel revelations about the non-linear impacts of Japan’s sustainable fiscal policy on its ecological footprint, thus demonstrating the existence of an ELC and also suggesting practical ways to have a better environment and economy. Graphical Abstract Highlights

Theoretical background: Literature indicates that high marginal tax rates elicit significant resistance from taxpayers, contributing to income underreporting and tax evasion. Taxpayer responses vary, as each individual possesses a distinct Laffer curve. When fiscal burdens are perceived as excessive, legal tax avoidance strategies are favored by taxpayers, who view them as ethically permissible, unlike illegal tax evasion, which is considered hazardous. If excessive burdens drive taxpayers into the shadow economy, long-term adverse consequences may arise, including the hysteresis effect (persistence of tax evasion driven by learning) and the snowball effect (social conformity leading to increased cheating). Tax reliefs, particularly deductions from the tax base, diminish progression and serve as a mechanism to mitigate incentives for illegal evasion. Purpose of the article: This article aims to analyze the extent to which tax reliefs, specifically those necessitating additional expenditures, can function as mechanisms to reduce incentives for tax evasion. The study examines the correlation between the number of taxpayers transitioning to the second tax bracket and the utilization of specific reliefs to identify those safeguards against excessive taxation levels. Research methods: The research utilized annual Personal Income Tax (PIT) settlement data published by the Ministry of Finance, spanning the period from 2007 to 2023. The analysis differentiated between lump-sum reliefs (automatic, e.g., child relief) and deductions (contingent upon expenditure, e.g., IKZE, disability expenses, donations). Due to the non-stationarity of the initial time series data, the study assessed the relationship by analyzing the correlation between the change (first difference) in the number of taxpayers in the second tax bracket and the change in the number of individuals claiming specific tax reliefs. Main findings: The analysis revealed a strong, statistically significant correlation between the transition to the second tax bracket and the increased utilization of the disability relief, the Individual Retirement Security Account (IKZE) relief, and deductions for donations for religious purposes. Conversely, no significant correlation was found for automatic reliefs (child relief) or deductions not primarily motivated by tax incentives (blood donation relief). The findings indicate that taxpayers in the higher bracket favor deductions for expenses they would have incurred anyway (disability relief) or for those linked to additional individual benefits (IKZE). Tax benefits become valuable and justify the associated costs only at elevated marginal tax rates. The utilization rates of such deductions can serve as a useful indicator for fiscal authorities to evaluate taxpayers' perceptions of their tax burden.

This study explores the applicability of the Laffer Curve in the context of the European Union (EU) by analyzing the relationship between taxation and fiscal revenue across personal income tax (PIT), corporate income tax (CIT), and value-added tax (VAT). Utilizing a comprehensive panel data set spanning 1995 to 2022 across all 27 EU member states, the research also integrates the Bird Index to assess fiscal effort and employs advanced econometric techniques, including the Hausman Test and log-quadratic regression models, to capture the non-linear dynamics of the Laffer Curve. The findings reveal that excessively high tax rates, particularly in some larger member states, may lead to revenue losses due to reduced economic activity and tax evasion, highlighting the existence of optimal tax rates that maximize revenue while sustaining economic growth. By estimating threshold tax rates and incorporating the Bird Index, the study provides a nuanced perspective on tax efficiency and fiscal sustainability, offering evidence-based policy recommendations for optimizing tax systems in the European Union to balance revenue generation with economic competitiveness.

Elasticity of corporate taxable income: evidence from Canadian corporate tax kinks

The impact of external debt on economic growth remains a pivotal yet unresolved question for developing economies, particularly in the ECOWAS region. This study argues that the quality of governance is the key to unlocking this puzzle. While external debt can be a catalyst for development, its benefits are often contingent on the institutional environment in which it is managed. To investigate this dynamic, we employ the Cross-Sectionally Augmented Autoregressive Distributed Lag (CS-ARDL) model—a method chosen for its robustness in handling the statistical challenges of panel data, such as cross-sectional dependence. Our analysis of ECOWAS nations from 2000 to 2023 yields two central findings. First, we confirm a nonlinear relationship, consistent with the Debt Laffer Curve, where moderate debt supports growth, but excessive debt becomes detrimental. Second, and more significantly, we find that governance quality critically moderates this relationship. Strong institutions not only enhance the positive effects of debt but also act as a buffer, mitigating associated risks like macroeconomic instability and exchange rate volatility. Conversely, weak governance exacerbates the downsides of borrowing. These findings underscore that effective debt management is inextricably linked to institutional reform. We therefore contribute to the literature by providing empirical evidence of how governance mechanistically shapes the debt-growth nexus, offering actionable insights for policymakers aiming to harness debt for sustainable development in West Africa.

The article examines the impact of the transition to a progressive personal income tax (PIT) scale in Russia starting from 2025. The theoretical context and international experience in applying progressive taxation to personal income are presented. Based on the Laffer curve model, the fiscal potential of the current tax rates (13%–22%) is assessed, and it is shown that the system is currently positioned on the upward-sloping segment of the curve. The advantages and limitations of the current tax scale are identified, along with its socio-economic significance and possible behavioral effects. The article also proposes measures to ensure fiscal sustainability and social equity in the further development of progressive taxation. Research writing purposes: studying the consequences of the transition to a progressive PIT scale in Russia from 2025 and evaluating its fiscal efficiency and behavioral impact. The conclusions received during the research: it was found that the current PIT rate structure in Russia (13%–22%) lies on the ascending portion of the Laffer curve, indicating that there remains fiscal room to increase revenues without risking a reduction in the tax base. The progression supports social fairness and brings the Russian system closer to international standards. However, any further adjustments to the tax rates should carefully consider behavioral responses and promote transparency and voluntary compliance mechanisms.

Evaluating UK Tax Policy Through the Laffer Curve: Income Threshold Freezes and Corporate Tax Reform

U.S. tariff policy has historically balanced competing goals—revenue, protection and reciprocity. Policy priorities have shifted over time in response to changing economic and political conditions. Using a calibrated general equilibrium model, this paper illustrates these trade-offs through the lens of tariff Laffer curves.

Shifting and Other Problems with Taxable Income Elasticity: Joel Slemrod’s Contributions to What We Know About Taxing Ourselves

This article provides an in-depth analysis of the theoretical foundations of the shadow economy and its relationship with fiscal policy in transition economies such as Uzbekistan. Based on literature and empirical data, it is determined that the shadow economy accounts for 11.3-11.8% of GDP globally, 34% in Uzbekistan, and increases the budget deficit by 15-20%. Using the Laffer curve and MIMIC models, the impact of high tax burden and institutional weakness is assessed and an optimal tax rate is proposed. The article examines the evolution of the shadow economy under the influence of the pandemic, digital technologies, and cultural factors, and provides practical recommendations for Uzbekistan on institutional reforms, digitalization, and increasing tax culture.

Purpose – Identify the relationship between the amount of taxes and their payment by a digital enterprise and develop recommendations for improving the quality of e- commerce taxation. Research methodology – On the basis of dialectical and systematic methods, the influence of the amount of the tax on filling the budgets of countries and the expansion of digital activities of enterprises was investigated. The spatial set of the study is economic agents of the EU and the USA who use the Internet for their business activities. The possibilities of conducting e- business in 15 countries of the world were studied. The time frame of the study is 2015–2025. Findings – The tax on digital products/services and virtual business is characterized through the prism of the amount of the tax, the procedure for its collection, and the amount of revenue to the budgets. Research limitations – The limitation of the study is that not all countries of the world that carry out e-commerce or engage in digital business have an open and regulated policy of taxation. Practical implications – The content of practical advice, the use of which will make it possible to maintain positive dynamics in the taxation of digital entrepreneurship, has been revealed. Originality/Value – After analyzing the graphical interpretation of the Laffer curve for digital entrepreneurship, we managed to find out that higher tax rates restrain the economic activity of digital enterprises.

This paper explores the behavioral dynamics of tax transparency, focusing on how shifting from hidden to explicit value-added taxes (VAT) impacts consumer behavior, utility perception, and government revenue. Drawing from a randomized controlled experiment with 361 participants, we test two hypotheses: that explicit taxation reduces consumer utility and that revealing hidden taxes diminishes tax compliance, especially in cash-based economies. The results reveal strong correlations between negative emotional responses—such as anger and frustration—and reduced consumption, particularly in countries where VAT is embedded in prices. Regression analysis further shows that tax transparency can lead to increased tax evasion, as consumers perceive explicit taxes as an added burden, prompting a shift to informal transactions. This shift in behavior aligns with a downward adjustment of the Laffer Curve, suggesting that increased tax visibility can paradoxically reduce government revenue. Our findings underscore the complexity of tax policy design, emphasizing the need for a balanced approach that considers the unintended consequences of transparency in economies with prevalent cash usage. These insights offer a compelling perspective for policymakers, highlighting the critical interplay between tax structure, consumer behavior, and revenue optimization.

Elevated elasticities in low-income brackets can emerge in tax systems that incentivize shifting the tax base from personal to corporate income due to substantial differentials. We examine the Brazilian case by estimating the elasticity of Taxable Income (ETI) using longitudinal data (2011- 2017) from personal income tax returns and calculating optimal taxation levels. We assess behavioral responses via the natural experiment resulting from inflation. Our estimates indicate income-weighted elasticities of 0.64 and 0.62 for taxable and Gross Income, respectively, and unweighted elasticities of 0.76 for Taxable Income and 0.71 for Gross Income. We observe substantially higher income-weighted elasticities for the lowerincome bracket (1.98 vs. 0.71 at the top). First-bracket income declarants may not have low overall incomes because some receive substantial taxexempt income – particularly dividends – or shift their Taxable Income to corporations. We find significantly higher elasticities for self-employed individuals compared to wage earners, with deductions playing a minor role. Our findings underscore the importance of integrating personal and corporate income tax systems.

The Laffer Curve, which illustrates the relationship between tax rates and fiscal revenue, has been a central theme in economic theory and fiscal policy since its formulation. This article provides a comprehensive review of the literature on the Laffer Curve, with a particular focus on the elasticity of the tax base as a tool for its analysis. The elasticity of the tax base refers to the sensitivity of fiscal revenue to changes in tax rates and is crucial for understanding how variations in taxation impact economic behavior and, consequently, public revenue. The study compares empirical evidence from the United States and Spain to offer a detailed perspective on how these economies respond to changes in tax rates. Through a comparative analysis, it highlights similarities and differences in the response of the tax base and the efficiency of tax collection. This article provides an integrated view of the applicability and limitations of the Laffer Curve in different national contexts, offering practical implications for policymakers and contributing to the debate on optimizing tax revenue.