Ages ago, I posted a similar topic. We're going to reevaluate the Laffer Curve, and how less taxes can actually increase revenue for the state. The relationship between tax rates and state income is [i]not[/i] linear. If you double tax rates, you will not double the state's revenue. Higher taxes are a disincentive to earn more money. Let's examine the Laffer Curve in action. (http://object.cato.org/images/Mitchell_Forbes_1108.jpg) In 1980, the top tax rate was a crippling 70%. In 1988, it was down to 28%. However, the IRS collected 5 times more from the rich (200k and above) when the top tax rate was just 28%. This is, as Daniel Mitchell puts it, "the Laffer Curve on steroids." Now, there are other factors that explain this disparity in income, including inflation, population growth, and other policy changes under Reagan. However, it would be ridiculous to suggest that the Laffer Curve doesn't play a part in the disparity. Here's a small clip from a Democratic Debate in 2008, between Clinton and Obama. It's 1:22 - not too long. It features a textbook example of leftist ideology - that taxes are meant to create "fairness," not growth or maximum revenue. (https://www.youtube.com/watch?v=gJimLZRC9N8) A question is directed towards Obama. It goes along the lines of, "We saw that a decrease in the capital gains tax actually increased tax revenue. If we assume that the lower rate will bring in more taxes, would you still support raising the rate from 15% to 28%?" Obama's answer is, surprisingly (or not), yes. Food for thought. There are two important points on the Laffer Curve: the revenue-maximizing point and the growth-maximizing point. Policy-makers should ideally be arguing within the bounds of those two points. Instead, we sit far beyond them.