The title of the article is: Where does the Laffer curve bend? I think it is more interesting to ask about when rather than where. Consider this old argument w

The title of the article is: Where does the Laffer curve bend? I think it is more interesting to ask about when rather than where. Consider this old argument which purports to show that raising taxes and raising them again will still bring in the revenue. Rich people spend future income. They look at their income and take out a loan to buy a sports car or a boat. Now they are on the hook for their out goings. If income tax goes up, they are going to have to work harder to find extra money to pay the tax and keep up their payments. I don't like this argument. Which is different from saying that I think it is false. I think it has psychological realism, people would rather work harder than sell the boat and repay the loan. But I don't like the argument because I think it is cruel and short-termist. People who get caught on that hook aren't going to enjoy the experience. Perhaps they pay off the loan and cut back. Perhaps they suffer from stress and have to take some months off work. Whatever. Five years later they will be off the hook, one way or another and they will not forget. When is the Laffer curve? If taxes rates go too high that might not be immediately apparent as it takes a few years for the decline in revenue to take place as people wriggle off the hook. If tax rates come back down I cannot see people who have be burned before rushing to rejoin the rat-race. Revenues will rise with a demographic slowness as those who have down-shifted age out of the workplace. There is also a generational aspect with many of the next generation of doctors, lawyers, and businessmen being the children of doctors, lawyers, and businessmen. Building a career takes a lot of discipline and it is much easier if you have a parent or aunt or uncle showing you the way and living a well rewarded life that shows you that it is worth it. The really tricky when question is: what level of taxation blocks the inter-generational transmission of cultural capital and results in a new 1960's in which young people turn on, tune in, and drop out.