With all the D.C. debate about the “Fiscal Cliff,” and the Obama administration’s nonsensical proposal to address the growing economic calamity; suck more money from the private sector to grow government, you may have heard some mention of the “Laffer Curve.” The “Curve” is basically a mathematical representation of the old adage: you can’t get blood from a turnip.
 
Here’s a brief explanation:
 

 
Although Tim Groseclose sets the “hump” at 33%, that figure is still somewhat debatable. An excellent article at the American Thinker, by Andrew A. Morgan, explains the variables involved ~

First, the curve is different for different types of taxation and is not the same for each income bracket. For example, the curve is not the same for the Personal Income Tax as it is for the Corporate Income Tax or for the Capital Gains Tax…
 
The curves for these different taxes and tax rates will begin and end at the same place. But the area between the slope and point of diminishing return is certainly not the same. Secondly, the economic climate at any given point in time introduces countless variables such as the general economic growth rate, banking practices, loan interest rates, employment rates, consumer confidence, inflation rates and many others, all of which contribute to the shape of the curve. The curve is not the same for the same tax at different points in time because economic conditions are constantly shifting…
 
…Thirdly, it is impossible to quantitatively “measure” the relationship with any exactness because of the inherent time lag involved between changes to the tax rate and the resulting impact on government revenue. Other factors always come into play during this lag period and to some degree contribute to the resulting government revenue.

All that being said, there’s no denying that “Laffer Curve” exists:

There is a relationship between rates of taxation and government returns. Earnings and profits which are taken from the people, investors, and the private business sector do represent a reduction in both financial fuel and worker incentive…
 
…The more money taken from a company, the less it has to invest or to pay its employees, and the more likely it becomes that the company will seek to protect its capital from taxation or consider outsourcing costly parts of its operation or relocating part or all of its operations to a country with lower tax rates. In the case of capital gains, the more profit is taken from an investor who risked his (or her) own capital, the less inclined he will be to risk further capital.
 
The more money taken from a worker’s paycheck, the less money there is for his personal budget and savings. As the amount of money withheld from the worker’s paycheck increases, the benefit this worker gains from his efforts proportionally diminishes — and with it his incentive to work.
 
At certain tax rates, these reductions are not effectively problematic. But for each tax, there is a threshold rate above which these reductions become problematic for both the private economy and for the government’s bottom line.

Big government types like to pretend the “Curve” is merely a conservative construct. True to form, facts – economic or otherwise – never get in the way of their agenda.
 
 
As Obama prepares to reap the political benefits from the class warfare he’s fomented, keep in mind; once the government takes enough from the makers, to give to the takers, the makers will stop making and we’ll all go off the cliff together.
 
Related:
Laffer Curve Warning about the Economy and Tax Revenue
Whether In A County or the Country, Higher Taxes Spell Trouble ~ The scale may be different, but the results are the same.
Lesson for Warren Buffett: British Millionaires’ Response to Tax Increases ~ When faced with a tax increase, Britain’s millionaires readily “voted with their feet.”