Understanding The Laffer Curve: Why tax increases of any kind won’t work
Before any intelligent discussion can be made about taxes and how much a society should contribute to them, the general economic theory of the Laffer Curve must be explored. For those who have no idea what the Laffer Curve is, the video below will teach you in a very concise way. Understanding the Laffer Curve is paramount to grappling the most compelling arguments of modern politics.
Many people who work in and around government without question are the type of people who are willing to contribute 50% to 70% of their incomes to paying taxes—after all, all the money they make comes from the community treasuries, so anything they receive is more than they would have had to earn on their own merits. This is also why government work tends to pay so well, because they are expected to support extra costs like union dues and excessive taxation without protest. The Laffer Curve for government workers who lean in the direction of socialism is statistically over 50%. However, for a person like me, my Laffer Curve is around 10%. Anything more than 10% of my income I consider to be a waste of money on government services I don’t want, need, or philosophically support. For a person like me, it is not worth opening a new restaurant, opening a new coal mine, or even building a rocket to explore space because the taxes on my earned income exceeds my personal Laffer Curve.
I may be willing to lend myself to other businesses as a “hired gun” to help them deal with their business troubles even if my income is taxed above 30% because I can negotiate in my loss to the government in my fee. It doesn’t matter to me so long as I get my money, and the purchaser of my services gets what they are hiring me for. But to carry all the responsibility of opening, operating, and maintaining a business when the taxation rate exceeds 10% for me is just not worth it. So I will not contribute to the economy in this fashion because the Laffer Curve is too radically on the wrong side of the chart for me. The people who think like I do are what the American economy might consider “underutilized capital.” We tend to tinker in our garages and write books instead of doing other things America might consider more economically productive because the Laffer Curve on our taxable income is too high. It is these kinds of people who pull the statistical Laffer Curve chart hump to the 33% mark. Government types support a Laffer Curve of 50% to 70%–and people like me support a Laffer Curve of 10%. That is how 33% is reached as an average.
When Obama and the minions of communist oriented government insist on higher taxes on the “rich” they are essentially pushing the Laffer Curve too far to the right statistically causing more of the productive to take their bags of money and quit, joining me in the garages of life playing with their Craftsman tools, building cars, working on motorcycles, and thumbing their noses at government. Obama assumes that the “rich” will be just as motivated to deal with all the headaches of business ownership if their personal Laffer Curves are moved to percentages increasingly over the 50% mark, and that is where the failures occur. Many will not and proportionally the higher the percentage of taxable income moves higher on the Laffer Curve, the more people will drop off the chart, cut their losses, and not participate economically.
Obama doesn’t understand this kind of thing because he was trained to be a communist by his mentors, he never tried to operate a business prior to his political career, and he is currently a public parasite—meaning he lives off tax money as a government employee. He is not a value added citizen—meaning his existence does not contribute positive dollars to any economy, he simply takes by the essence of his life. Obama learned in college that the Laffer Curve is way out there at the 70% mark, and he believes it to this day. He looks at people like me who reside at the 10% mark and get angry with us. He signs Executive Orders by the stacks fantasizing that if he strong arms enough, that my type of people will decide for our own health and well-being that we will move our Laffer Curve up to 30% to 50%. But he is wrong and foolishly naive. In response, my type of people will simply go “pirate” and find other ways to shield our assets from the government trolls who wish to steal our property, starting with our money. Instead of complying with the government we will seek ways to undermine it, and gain back the values lost to looters like Barack Obama and his tax grabs.
It is because of the Laffer Curve that Obama’s “tax the rich” scam won’t work. The radical activists whom serve his private council are people like Richard Trumka, Van Jones, and other radical progressive/communist supporters and their Laffer Curves are well above the 50% range, because they are not the type of productive people who make anything. So anything that comes their way is more than they would have obtained if they just sat on their couches at home and watched TV. So they clearly support higher taxation on the Laffer Curve since they directly benefit with very little investment on their part. What their vision does is destroy the incentive for people who reside with a Laffer Curve of 10% to 20% to stay home and not play the game—which means less wealth is created, and the economy will recede instead of expand.
Many CEO types, many of the rich, many of the movers and shakers of the American economy attempt to stay on the good side of government with charity work, political contributions, and celebrity appeasement. Even the “rich” like Warren Buffet who supports the higher taxes on Obama’s Laffer Curve cozy up to people like Obama to keep the government from stealing too much of his wealth while he uses new federal laws he helped to fashion to crush his competition—which is why he supports Obama’s tax increases. CLICK HERE TO LEARN MORE. CEO’s try to play the game of politics to keep the Laffer Curve from moving too high up the graph. The closer to 0% the better, and when the Laffer Curve gets up over 40% the value of the efforts given to operate any kind of economic endeavor diminishes considerably—and retiring to a fishing village in Florida becomes much more preferable.
Government cannot change human nature, and they will never achieve acceptance of higher percentages on the Laffer Curve no matter what effort they employee, whether it be attempted force, or political maneuvers. Every human being has their cut-off point, and the further up the Laffer Curve the taxes go, the fewer people there are to contribute to a thriving economy. It is that simple. The foolish assumption by communists and political utopia builders is that financial producers will feel compelled to contribute equally to a world vision created by half-baked politicians and academic theorists—but producers won’t, because the value of those government fools is flushed out in the real world by what they contribute economically–which is very little. That is why the economy is tanking under Barack Obama, because he does not understand the Laffer Curve and like every pinhead dim-wit in the academic halls of universities, they have allowed their naive world vision to corrupt their logic and deny them the understanding of how the world works—and for them this is reflected on their personal Laffer Curves that are far up the ladder. The higher the tax rates on personal income Americans will decide with increasing frequency to withdrawal from economic creation and join me turning wrenches in their garages and simply watching football games all day on a Saturday afternoon and to say to hell with business and the government that loots off its back. That is what the Laffer Curve is and what it means to society.
Rich Hoffman
