An inverse relationship between tax rates and tax revenues and a positive relationship between tax rates and tax revenues is relationship between marginal tax rates and total tax revenues collected by the government.
The Laffer curve illustrates the link between tax revenue and tax rates and demonstrates how changes in tax rates affect tax collection. According to the curve, which was popularized by economist Arthur Laffer, increasing the tax rate does not always result in an increase in revenue because the tax base shrinks.
Since there is no tax applied when the tax rate is 0, there will be no tax revenue. whereas, on the other hand, if the
Thus, An inverse relationship between tax rates.
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