How far are we from the slippery slope? The Laffer curve revisited

Harald Uhlig () and Mathias Trabandt

No 1174, Working Paper Series from European Central Bank

Abstract: We characterize the Laffer curves for labor taxation and capital income taxation quantitatively for the US, the EU-14 and individual European countries by comparing the balanced growth paths of a neoclassical growth model featuring ”constant Frisch elasticity” (CFE) preferences. We derive properties of CFE preferences. We provide new tax rate data. For benchmark parameters, we find that the US can increase tax revenues by 30% by raising labor taxes and 6% by raising capital income taxes. For the EU-14 we obtain 8% and 1%. Denmark and Sweden are on the wrong side of the Laffer curve for capital income taxation. JEL Classification: E0, E60, H0

Keywords: dynamic scoring; incentives; Laffer curve; US and EU-14 economy (search for similar items in EconPapers)
Date: 2010-04
New Economics Papers: this item is included in nep-cba, nep-dge and nep-pbe
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Citations: View citations in EconPapers (60)

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Related works:
Working Paper: How Far Are We From The Slippery Slope? The Laffer Curve Revisited (2009)
Working Paper: How Far Are We From the Slippery Slope? The Laffer Curve Revisited (2006)
Working Paper: How far are we from the slippery slope? The Laffer curve revisited (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbwps:20101174

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