Quote Originally Posted by Loki View Post
No, it's not (the Laffer Curve is about a short-term relationship between taxes and revenues). It's about the basic principle that the lower someone's marginal utility of doing something, the less they'll do it. In this case, the lower the marginal utility of earning an extra dollar in profit, the less the incentive to try to earn that dollar. If you tax people/firms enough, they will not work/produce enough to keep the national income from falling. Though any taxes will reduce willingness to work/produce, which means they are hurting the ability of the state to raise revenue in the future. Obviously a certain level of taxation is necessary, but people have to acknowledge that it comes at a long-term cost, and not just to the firm's pocketbook.
Only that's not a major contributing factor to our current dilema. Remember how you brought up supply and demand in another thread? Well, it's more appropriate here since our biggest problem now is demand.