Abstract
Research objectives: This study aims to analyze the nonlinear relationship between tax rates and government revenue based on the Laffer Curve framework and to identify the concept of the optimal tax rate. Design/Methodology/Approach: The research employs a theoretical and analytical approach using the Laffer Curve model. Comparative and graphical analysis is applied to evaluate changes in tax revenue at different tax rate levels. Research findings: The findings indicate that tax revenue initially increases with rising tax rates, reaches a maximum point (optimal tax rate), and then declines as tax rates continue to rise. Excessive taxation leads to reduced economic activity, tax evasion, and growth of the informal sector. Theoretical contributions/Originality: The study contributes to macroeconomic theory by explaining the inverted U-shaped relationship between tax rates and revenue and emphasizing behavioral responses in taxation. Implications for practitioners/policy: The results suggest that policymakers should avoid excessively high tax rates and instead aim to determine the optimal tax level that maximizes revenue while maintaining economic incentives. Limitations/Research implications:
The study is theoretical and does not include empirical econometric testing. Future research can focus on country-specific optimal tax estimation.