In country X, the marginal rate of income tax applied to the highest earners was 83%, rising to 98% when income came from interest or dividends. That top marginal rate was later cut to 40%. Even after this cut, the tax revenue collected from the highest earners rose very significantly. Which theoretical concept shows this connection between tax rates and tax revenue?
- Athe J curve
- Bthe Laffer curve
- Cthe Marshall-Lerner condition
- Dthe Phillips curve