TY  - JOUR
AU  - 
AU  - Uhlig,Harald
TI  - How Far Are We From The Slippery Slope? The Laffer Curve Revisited
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 15343
PY  - 2009
Y2  - September 2009
UR  - http://www.nber.org/papers/w15343
L1  - http://www.nber.org/papers/w15343.pdf
N1  - Author contact info:
Harald Uhlig
Dept. of Economics
University of Chicago
1126 E 59th Street
Chicago, IL 60637
Tel: 773/702-3702
Fax: 773/702-8490
E-Mail: huhlig@uchicago.edu
AB  - We compare Laffer curves for labor and capital taxation for the US, the EU-14 and individual European countries, using a neoclassical growth model featuring "constant Frisch elasticity" (CFE) preferences. We provide new tax rate data. The US can increase tax revenues by 30% by raising labor taxes and by 6% by raising capital income taxes. For the EU-14 we obtain 8% and 1%. Dynamic scoring for the EU-14 shows that 54% of a labor tax cut and 79% of a capital tax cut are self-financing. The Laffer curve in consumption taxes does not have a peak. Endogenous growth and human capital accumulation locates the US and EU-14 close to the peak of the labor tax Laffer curve. We derive conditions under which household heterogeneity does not matter much for the results. By contrast, transition effects matter: a permanent surprise increase in capital taxes always raises tax revenues.
ER  -