Abstract
This study aims to measure the optimal tax burden of the Jordanian economy using time series data from 1980 to
2020. Laffer curve was utilized to measure the optimal size of tax revenues in Jordan, the optimal size of income tax and
the current tax burden compared to the optimal size of tax. To this end, a standard model was used to estimate Laffer
curve and a fully modified ordinary least squared model (FMOLS) was used to estimate the parameters. The results
indicated that the current tax rates are lower than their optimal size. Income tax levels in Jordan are also lower than international
levels, whereas the tax burden is relatively higher. The study recommended that the government can increase
its income from income tax and profits by increasing the actual rates to be closer to the optimal rates. The study also
recommended that the actual rates have to be increased differently across sectors, since decision-makers in Jordan are
increasingly paying more attention to industrial sectors.