The Laffer Curve
You guys know the Laffer curve. It is the one that shows that as taxes go up the incentive to earn goes down. It's not rocket science. In fact it's the point of having a progressive income tax structure.
Question for the Republicans on the board. Do you understand how a progressive income tax structure works? For example suppose the following structure:
Income--Tax rate
Up to 20,000 -- 10%
20,001-50,000 -- 20%
50,001-100,000 -- 30%
100,000-1,000,000 -- 40%
Over 1,000,0001 -- 50%
Suppose a person has $20,000 of taxable income. How much tax does he pay and what is his effective tax rate?
Suppose a person has $20,001 of taxable income. How much tax does he pay and what is his effective tax rate?
Suppose a person has $125,000 of taxable income. How much tax does he pay and what is his effective tax rate?
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