Journal of Applied Economic Research
ISSN 2712-7435
Graphic Interpretation of the Laffer Curve with Tax «Migration»
Kakaulina M.O.
Abstract
The paper deals with the problem of graphical representation of the Laffer curve. The aim of this article is to develop a graphical interpretation of the Laffer curve, taking into account the tax «migration» process. In the course of the research the following methods of scientific knowledge were used: comparative and critical analysis, the graphical method. The analysis of the existing variants of visualization of the curve is carried out depending on the interpretation of various initial theoretical assumptions, namely: the border conditions for the selection of a specific tax, the presence of several inflection points, the introduction of additional coordinates in the analysis – «time» and «tax base», the consideration of additional factors (inflation, shadow economy, etc.). We considered conditions for the outflow of capital and, as a result, tax «migration». The author's definition of the term «tax «migration», including the main reasons for its occurrence, has been introduced. A variant of graphical representation of the Laffer curve in different coordinate planes is suggested, taking into account tax «migration». The obtained results allowed for establishing a «corridor» of permissible changes of tax burden beyond which tax revenues are irreversibly reduced. It was concluded that it is only reasonable to reduce the level of the tax burden in order to stimulate the production activity of economic entities, rather than to replenish the country's budget, since in the future these concessions will never lead to an equivalent increase in tax revenues. In the future, the obtained theoretical results must be supported with empirical calculations. Based on the results of the study, we believe that when using the Laffer curve as a tool for analysis in each specific case, it is necessary to specify the conditions for its use and its external appearance.
Keywords
Laffer curve; tax burden; tax revenues; tax «migration»; outflow of capital; open economy; tax resident; graphic interpretation; income effect; substitution effect; tax «hysteresis».
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About Authors
Kakaulina Maria Olegovna – Candidate of Economic Sciences, Associate Professor, Department of Finance, Amur State University, Blagoveschensk, Russia (675027, Amur Region, Blagoveschensk, Ignat’yevskoye shosse, 21); e-mail: beuty1@mail.ru.
For citation
For Citation: Kakaulina M.O. Graphic Interpretation of the Laffer Curve with Tax "Migration". Bulletin of Ural Federal University. Series Economics and Management, 2017, Vol. 16, No. 3, 336-356. DOI: 10.15826/vestnik.2017.16.3.017.
Article info
Article Info: Received March 20, 2017; Accepted April 23, 2017.
DOI: http://dx.doi.org/10.15826/vestnik.2017.16.3.017.
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