On optimal tax rates and shifts in the peak of the Laffer curve - An empirical study of Swedish municipalities during the years from 2000 to 2017.

Abstract

This report presents an empirical study of the average Laffer curve of Swedish municipalities, with a focus on determining whether the position of the peak of the curve has shifted or, put differently, whether the optimal value of the average municipal tax rate has changed over time. A regression model based on the Laffer curve relationship between tax revenue and tax rates and including several control variables is proposed. The results from several regressions for different time periods between the years 2000 and 2017 are presented, and they contain some evidence suggesting that the position of the peak of the average Laffer curve of Swedish municipalities moved during the period from 2000 to 2017.