Direct Tax and Laffer Curve

Authors

  • Himani Gupta
     Associate Professor, Jagannath International Management School, Vasant Kunj, New Delhi – 110070, Delhi
  • Manisha Gupta
     Assistant Professor, Jagannath International Management School, Vasant Kunj, New Delhi – 110070, Delhi

DOI:

https://doi.org/10.15410/aijm/2019/v8i2/145177

Keywords:

Corporate Tax Rate, Corporate Tax Revenue, Individual Tax Rate, Individual Tax Revenue, Laffer Curve.

Abstract

Direct tax structure in India is fluctuating from last many years. There was a time when the Indian Government was charging the maximum tax rate of 97.75% in the year 1973-74. Since then it is decreasing. But still the individual and corporate tax rate imposed by the government of India does not seem to generate the maximum tax revenue. Indian government is under debt from many years. This debt is increasing day by day. 2018, is the year in which interest on debt is almost equal to the amount of debt. The government needs more tax revenue to overcome its expenditure and pay off the debt to foreign countries. On the other hand, if the tax revenue is less and expenditure is more than the government has to borrow more funds from foreign countries leading to more debt. Immediate action is required on such an issue. Hence, the tax structure needs to be revised. In this paper we are going to determine the optimum tax rate for both individual as well as corporate tax. With the help of this optimum tax rate the government is going to generate maximum tax revenue and able to meet its expenditure along with the payment of its debt. Laffer curve concept is used in our study to find out the optimum tax rate which will generate maximum revenue and contributing to the economic growth. The period for which the data has been collected range from 1996 to 2016. The data is analysed with the help of Ms Excel and EViews 8.

Downloads

Download data is not yet available.

Metrics

Metrics Loading ...

Downloads

Published

2019-07-31

How to Cite

Gupta, H., & Gupta, M. (2019). Direct Tax and Laffer Curve. ANVESHAK-International Journal of Management, 8(2), 41–56. https://doi.org/10.15410/aijm/2019/v8i2/145177

Issue

Volume 8, Issue 2, July 2019

Section

Articles
Crossref
Scopus
Google Scholar
Europe PMC

References

Becsi, Z. (2000), "The shifty Laffer curve", Economic Review (Atlanta, Ga.), 2000, Vol. 85 No. 3, pp. 53-53.

Henderson, D. (1981), "Limitations of the Laffer Curve as a justification for tax cuts", Cato J., 1981, Vol. 1, pp. 45.

Hsing, Y. (1996), Estimating the Laffer curve and policy implications. The Journal of Socio-Economics, 1996, Vol. 25, No. 3, pp. 395-401.

Karas, M. (2013). "Tax rate to maximize the revenue: Laffer curve for the Czech Republic", Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, 2013, Vol. 60, No. 4, pp. 189-194.

Khaldun, I. 2012, Al-Muqaddimah.

Malcomson, J.M. (1986), "Some analytics of the Laffer curve", Journal of Public Economics, 1986, Vol. 29, No. 3, pp. 263-279.

Mitchell, D. J. (2009). The Laffer Curve: Understanding the relationship between tax rates, taxable income, and tax revenue. Center for Freedom and Prosperity Foundation Prosperitas. 2009.

Novales, A, Ruiz, J. (2002). Dynamic laffer curves. Journal of Economic Dynamics and Control, 2002, Vol. 27, No. 2, pp. 181-206.

Sen, H., Bulut-Cevik, Z. B., Kaya, A. (2017), The Khaldun-Laffer curve revisited: A personal income tax-based analysis for Turkey.

Smith, A. (1937). The wealth of nations (1776).

Van Duijn, J. J. (1982), "Supply-side economics: het antwoord op de crisis? [Supply-side economics: the answer to the crises?]", in Sint, M.,Verbruggen, H., (Eds.), Economen over crisis [Economists on the Crisis], Intermedair, Amsterdam/Brussel, pp. 231-277.