Well, you get the idea. In this graph, the x-axis (horizontal line) is the tax rate, and the y-axis (vertical line) is the total amount of revenue that each tax rate produces.
Anyway, Mr. Hawkins' argument is that just because the Laffer curve has been shown to increase revenue, that doesn't mean that the maximum amount of revenue has been reached by our government yet. In other words, it may be possible to raise taxes and increase revenue even more than we are receiving now.
Now, I don't want to be accused of distorting Mr. Hawkins' argument. I don't recall him arguing that we must raise taxes right now in order to increase revenue at this moment in time. No, it seems to me that Mr. Hawkins is arguing that sometime in the very near future, we may find it necessary to increase taxes. When that happens, we as conservatives must keep in mind that Laffer's curve will bear this move up as necessary and justified.
And this is the problem that I have with his argument. While I agree with his conclusion that it may be possible to raise taxes a little bit more in order to maximize revenue, I do not agree with the motivation. Let me explain in more detail.
It seems to me that Mr. Hawkins' argument is at some point we may find ourselves on the left side of the above graph. Let's say that at this undefined moment in time we are at a point just a little to the left of the apex on the graph. If we just increase the tax rate to the point that is the apex, we will then increase the amount of revenue. This is undoubtedly true.
But just because something is true, does not make it right. Or at least, does not make it automatically the right thing to do. While Mr. Hawkins focuses on the revenue part of the graph, I think that we should focus more on the tax rate of the graph. From a purely financial point of view, raising taxes to such a point would be good for increased revenue.
But I do not believe that we should focus exclusively on the purely financial point of view. I don't believe it is government's role to be more concerned with the raising of revenue. While government should raise revenue, it should be with the end view of fertilizing the fields for business to grow its crops in while providing for the common defense.
According to our Constitution, government has a very limited and defined role. Everything beyond that role is reserved for the individual states to deal with. And since the success of all of the businesses within a state's border can only be to the benefit of the individual state, it is in the individual states' interest to have successful businesses.
Whenever the federal government levies taxes on businesses, it is impeding the ability of those businesses to perform to the best of their ability. Obviously, the more the federal government levies taxes, the more those businesses are impeded. How much the federal government should impede those businesses (i.e. by imposing taxes) is up to whichever philosophy is in charge of the federal government.
As conservatives, I think that we should impede businesses as little as possible, for the obvious reason that the less that businesses are impeded, the better that they will do. The better that businesses do, the more jobs are created and the more wealth is created. With the creation of more jobs and wealth, government's strength over it's limited role becomes increasingly stronger.
Thus, government and business are in a symbiotic relationship, with neither controlling the other, but influencing the other. Businesses grow stronger, creating a stronger tax base and increasing revenue, while government protects businesses from any outside influences or inside poisoning.
In other words, I would rather prefer that we not tax businesses enough and create stronger businesses and weaker government interference, than to tax businesses at the very apex of the Laffer's curve and have businesses impeded by government interference.
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