The Laffer curve is misleading because it ignores the difference between taxing ordinary levels of income and taxing very large incomes. The Laffer curve has one undisputed feature that applies to any kind of tax. If tax rates fell to zero the government would have no tax revenue.
So, the Laffer curve correctly starts at the point of zero tax and zero revenue. As the tax rate increases the total tax revenue also increases until taxes start to interfere with the economy. With that assumption we can imagine that the curve drops to zero again as the tax rate reaches 100%, because with that 100% rate people would have no incentive to make more money by any means.
However, total income would still grow some up to the 100% point, and although people might not seek more income at 100% that doesn't mean that their total income and the resulting tax revenue would fall to zero. Only the slope would be zero. It's so easy to confuse people by mixing up a rate with an amount. So the corrected Laffer curve would not have the revenue fall to zero at the 100% tax rate. Only the slope would fall to zero.
And even if it wasn't just a bs curve, we should avoid creating incentives for individuals to make more money than they can spend on a few lifetimes of personal consumption or for investors as a group to seek more money than is needed for investment. I'm calling that surplus income. I don't mean that all profits are surplus income. I mean the profits above and beyond what would be spent or invested. ... that is the money we must borrow... or the money we used to tax... to prevent depression. Keynes thought lowering the return on investment could address this problem just as well as redistribution might.
Let's make a new curve showing the government revenue derived from taxing surplus income. It would not follow the Laffer curve.
The curve for that kind of tax would start at zero like the Laffer curve, but at 100% the economic bottleneck caused by surplus income would be removed and the economy would flourish because of the tax. Putting surplus income back into circulation is a proven economic cure, and the government revenue would continue to climb rapidly higher as the tax rate on surplus income approached 100%.
The Laffer propaganda supporting tax-cuts for the rich can be discredited by supplying a curve that applies to taxing the rich.
Barry