Tax-to-GDP & Laffer Curve Peak Estimate Calculator

Analyze national tax burden with clear guidance on revenue potential and peak rates using robust models and charts Discover how small shifts in policy affect collections and efficiency Plan evidence based adjustments grounded in elasticity insights and base shrinkage dynamics for smarter fiscal strategy achieving balanced growth while sustaining services and encouraging investment nationwide

Inputs
Displayed in results only.
Use the same currency throughout.
Approximate tax-to-GDP ratio for the whole economy.
Typical range 0.2–1.0; higher means stronger behavioral response.
Often around 1.3–3.0.
Model summary
  • Chosen model peak rate: 62.50%
  • Effective k used: 0.8000
  • Curve: R(t) = GDP × (t − k·t²)
Results
Current revenue
$13,200,000,000.00
Tax-to-GDP now: 15.00%
Peak revenue (model)
$31,250,000,000.00
Tax-to-GDP at peak: 31.25%
At the estimated peak, revenue could be higher by $18,050,000,000.00 relative to the current rate.
The curve shows modeled total revenue versus the statutory rate t. Markers indicate the current rate and the estimated peak.
Assumptions & notes
  • Elasticity-based peak uses τ* = 1 / (1 + a·e). Setting τ* fixes k so the quadratic peaks at τ*.
  • Quadratic model approximates base shrinkage as t rises. It is a stylized macro view, not a replacement for microsimulation.
  • GDP is treated as a contemporaneous base; dynamic general-equilibrium effects are not modeled.
  • Results are illustrative and depend on parameter choices.

FAQs

The elasticity approach computes the peak rate from behavioral responses and income distribution parameters. The quadratic approach specifies a simple revenue curve with a tunable deadweight parameter k.
Many studies place elasticity of taxable income between 0.2 and 1.0, and the Pareto parameter near 1.3–3.0 for top incomes. Sensitivity testing across plausible ranges is recommended.
In this stylized setup the base is GDP and the statutory rate is treated as the average effective rate, so the ratio equals the rate. In practice there are many adjustments and exemptions.
Yes. Under some parameter choices the peak can be higher or lower. The elasticity approach directly determines the peak, whereas the quadratic model sets it via k = 1/(2τ*).
Not necessarily. Governments balance revenue needs with efficiency and equity. Revenue peaks are useful reference points, not universal targets.
They are illustrative. Real-world systems include multiple taxes, brackets, avoidance responses, and macroeconomic feedbacks. Use this tool for scenario exploration and sensitivity analysis, not for definitive forecasting.

Educational tool. No financial, tax, or legal advice.

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Important Note: All the Calculators listed in this site are for educational purpose only and we do not guarentee the accuracy of results. Please do consult with other sources as well.