In practice, a government with unlimited capacity for raising taxes will just expand its scope indefinitely.

Even considering the Laffer curve, no government today has tax rates at what empirical analysis suggests would be revenue maximizing, so not sure this is true.

> no government today has tax rates at what empirical analysis suggests would be revenue maximizing

Because of all the friction in raising taxes on a cash based system. That's the whole point.

What? No, the Laffer curve already describes that. And best approximations of the rate at which the incentive to shirk taxes is so high as to lower total revenue are nowhere near where rates sit now, basically everywhere.

No. The Laffer curve is about taxable income elasticity. It says nothing about the practical challenge of tracking taxes owed and actually collecting them in a cash based system as the parent was suggesting

Is tax avoidance/evasion not a part of taxable income elasticity? My understanding was that it is

I suppose it could be fine to include it that way... Ie. A cash based world where tax evasion is harder to detect would have higher elasticity of taxable income. It's also true that the model does not require any tax evasion at all.

Don't mistake the map for the territory. Model behavior proves nothing.

If only the population of the UK was allowed to choose their government.