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LAFFER CURVE: The graphical inverted-U relation between tax rates and total tax collections by government. Developed by economist Arthur Laffer, the Laffer curve formed a key theoretical foundation for supply-side economics of President Reagan during the 1980s. It is based on the notion that government collects zero revenue if the tax rate is 0% and if the tax rate is 100%. At a 100% tax rate no one has the incentive to work, produce, and earn income, so there is no income to tax. As such, the optimum tax rate, in which government revenue is maximized, lies somewhere between 0% and 100%. This generates a curve shaped like and inverted U, rising from zero to a peak, then falling back to zero. If the economy is operating to the right of the peak, then government revenue can be increased by decreasing the tax rate. This was used to justify supply-side economic policies during the Reagan Administration, especially the Economic Recovery Tax Act of 1981 (Kemp-Roth Act).
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SAVINGS DEPOSITS Interest-paying bank accounts maintained by traditional commercial banks, credit unions, savings and loan associations, and mutual savings banks that are used by consumers to store wealth. Savings deposits are one of two types of time deposits. The other is certificates of deposit. Savings deposits, along with certificates of deposit and other near monies, are added to M1 to derive M2.
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RED AGGRESSERINE
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Today, you are likely to spend a great deal of time looking for the new strip mall out on the highway wanting to buy either income tax software or a how-to book on the art of negotiation. Be on the lookout for telephone calls from long-lost relatives.
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The portion of aggregate output U.S. citizens pay in taxes (30%) is less than the other six leading industrialized nations -- Britain, Canada, France, Germany, Italy, or Japan.
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"I love the man who can smile in trouble, who can gather strength from distress and grow brave by reflection. " -- Thomas Paine, statesman
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NABB
National Association of Business Brokers
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