The Mean Value Theorem on Why You Must Vote Against Tax Increases

Today the State of Arizona was kind enough to offer me the option of voting against a "temporary" tax increase. The argument is that the State needs greater revenues to balance the budget and that therefore, they claim, higher tax rates are desirable.

Of course, their argument is specious. I still remember calculus well enough to understand that any function that is zero at two points but known to be positive in the interval bounded by those points, will have a maximum value in that interval. This is due to the Mean Value Theorem. As a consequence it is not necessarily so that higher tax rates mean higher revenues.

It is necessarily so that a tax rate of zero creates tax revenue of zero. Likewise, a tax rate of 100% will collect zero revenue as well. This second point is a bit more subtle, but ultimately inarguable. In the real world you'll never successfully tax any ongoing activity at 100%.

Those observations lead to the "Laffer Curve" which the left hates as much as any other part of reality. At the same University where I learned about the Mean Value Theorem I had a Macroeconomics TA deride the Laffer Curve as a fiction. All I could say to him was "didn't do well in Calculus then, eh?"

In my lifetime reductions in tax rates have lead to growth in revenues, and we are by no means in an era of low taxes. Americans today are taxed at greater total rates than at any time in 30 years, and we are about to experience the greatest increase in federal taxation in the history of the nation.

Any jurisdictions that want to increase revenues need to be reducing taxes at this time. Politicians who claim to want to increase revenues by raising tax rates are either liars or innumerate (usually both).