Revenue Created By A Tax Increase.

Have you ever wondered why the amount of revenue increases when federal income tax rates are reduced? This is called the Laffer Curve.

For example is the bus company does not have enough revenue to cover expenses there are two ways to increase revenue. 1) Increase fares ) 2 Reduce fares to fill the bus in addition to better marketing. The fare increase assumes that the ridership will not change . Let,s say the fair goes from $1.00 to $1.50. The bus has 35 seats. Average ridership is 7-9. Total revenue is $7.00 to $9.00. When the rates are increased the ridership drops to 5 so the revenue drops to $7.50. If the fair was reduced to $.75 and the ridership was increased to 20 the revenue increases to $15.00. Maximize ridership to maximize revenue.

Laffer Curve shows when tax rates get to high the number of tax payers decreases because the "movers" and "shakers" stop creating taxable income. Every time it is tried it has worked and the politicians just keep raising taxes.

For more information see www.makemoneywork.info.