David Brooks writes The Progressive Shift in The New York Times, 3/18/13
The first problem, of course, is that there aren’t enough rich people to cover even the current spending plans. As an analysis by the group Third Way demonstrated, even if we threw every semiplausible tax increase at the rich, the national debt would still double over the next three decades.
The second problem is that if you set the tax burden at astronomical levels you really do begin to change behavior and wind up with a very different country. You don’t have to be a rabid supply-sider to believe that when you start taking away 80 percent or 90 percent of somebody’s top marginal earnings, you are going to get some pretty screwy effects.
Higher taxes will produce long-term changes in social norms, behavior and growth. Edward Prescott, a winner of the Nobel Memorial Prize in economics, found that, in the 1950s when their taxes were low, Europeans worked more hours per capita than Americans. Then their taxes went up, reducing the incentives to work and increasing the incentives to relax. Over the next decades, Europe saw a nearly 30 percent decline in work hours.
The rich tend to be more sensitive to tax-rate changes because they’ve got advisers who are paid to be. Martin Feldstein, an economics professor at Harvard, looked into tax changes in the 1980s and concluded that raising rates causes people to shift compensations to untaxed fringe benefits and otherwise suppresses their economic activity. A study last year by the economists Michael Keane and Richard Rogerson found that tax rates can have a surprisingly large influence on how much people invest in education, how likely they are to create businesses and which professions they go into.
At some point your realize that not only is there not enough wealth to support your programs but that efforts to extract more from a shrinking pool becomes self defeating. Just because you do not believe in gravity does not make its effects go away.
Laffer Curve effects were rejected by progressives because they did not want to believe that the rich would pay more if we taxed them less. Yet economic growth is the only solution to a government that wants to spend more and taxpayers that do not want to pay more. Supply side economics is just another word for ‘economics’.