Originally Posted by The Mad Crapper
The federal government gets much more revenue if you impose a 40 percent tax on a large number of very wealthy millionaires than if you impose a 70 percent tax on a small number of less wealthy millionaires.
Every tax has a “revenue-maximizing” point well short of 100 percent. If a tax is set higher than its “revenue-maximizing” point, overall tax revenue to the government will decrease.
The Laffer Curve is definitely a solid concept, and it is stupid for the left to try to dismiss it altogether.
However, it is also tough to credibly argue that we are currently to the right of the inflection point of the curve, as we probably were during the first years of Reagan. The corollary to that last sentence I bolded, which a lot of people don't want to talk about, is if a tax is set lower
than its "revenue-maximizing"point, overall tax revenue will decrease as well.
The top earners are paying some of the lowest marginal income tax rates in modern US history. Given their much greater reliance on capital gains taxes which receive very favorable tax treatment, and proportionately less on income, the very top super-wealthy earners pay a smaller overall effective tax rate than the merely "pretty wealthy" workaholic professionals who rely on a 50-60 hour a week high 6 figure income.