- Supply side economists tend to believe the ASA curve will determine levels of inflation, unemployment, and economic growth.
- To increase the economy, you take actions to shift the AS curve to the right.
- Always benefitting the company first.
- They focus on marginal tax rates, which is the amount paid on the last dollar earned or on each additional dollar.
- Lowered taxes are an incentive for businesses to invest in our economy.
- Lowered taxes are incentives for people to increase savings and therefore create lower interest rates for increases and business investment.
- They only believe in AS.
- The laffer curve is a trade off between tax rates and government revenue
- It is used to support the supply side argument
- As tax rates increase from zero, tax revenues increase from zero to some maximum level and then decline.
-Criticisms of the Laffer Curve:
-Research suggest that the impact of tax rates of incentives to work save and invest are small.
-Tax cuts also create demand. Which will cause demand to exceed supply.
-Where the economy is actually located on the curve is difficult to determine.
-Reaganomics:
-lowered the marginal tax rates to get the US out of a recession led to a deficit.
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