Montgomery County in Maryland is not exactly a hotbed of free market thinking or a bastion of limited government.
It’s one of the richest counties in the nation, but not because of entrepreneurship and wealth creation. Instead, it’s a bedroom community for over-paid bureaucrats, corrupt lobbyists, fat-cat contractors, and other ne’er-do-wells who commute into Washington and live off the blood, sweat, and tears of people in the economy’s productive sector.
To give you an idea of its political leanings, Obama won 72 percent of the vote in Montgomery County in 2008 and all nine members of the County Council are Democrats.
So you wouldn’t think this is a place where lawmakers ever have anything sensible to say about tax policy. But, lo and behold, one Councilman recognizes that there’s no Berlin Wall surrounding the County. As such, higher tax rates may not generated additional tax revenue if people vote with their feet.
You can listen to George Leventhal by clicking here, but here’s the relevant quote.
We may be reaching a tipping point with tax rates. There’s a point beyond which you can keep raising the tax rates, but you won’t get more revenue because if people leave the county or if new businesses don’t start you’re not getting new revenue.
For the uninitiated, Leventhal is talking about…gasp…the Laffer Curve.
Folks like Paul Krugman would like you to believe that the Laffer Curve is a twisted fantasy concocted by stooges for the rich. He writes that it is “junk economics” to consider the relationship between tax rates, taxable income, and tax revenue.
Get the Market Movements in Advance: William's Edge Webinar for Thursday, March 6th, 2014 | John Ransom