I agree. The basic premise that revenues approach zero as the tax rate approaches the extremes (zero and 100 percent) is correct. Of course, it's very doubtful that the relationship is a nice, symmetrical curve as pictured above. In addition, there are many other factors that affect revenues. Finally, every credible study that I've seen suggests that tax rates are on the low side of that rate that would bring in the highest revenues. For example, in the article, Moore states:
In the 1980s, President Ronald Reagan chopped the highest personal income tax rate from the confiscatory 70% rate that he inherited when he entered office to 28% when he left office and the resulting economic burst caused federal tax receipts to almost precisely double: from $517 billion to $1,032 billion.
What Moore doesn't mention is that revenues have likewise doubled (or better) during EVERY SINGLE DECADE SINCE THE GREAT DEPRESSION! They went up 502.4% during the 40's, 134.5% during the 50's, 108.5% during the 60's, and 168.2% during the 70's. At 96.2 percent, they nearly doubled in the 90s as well. Hence, claiming that the Reagan tax cuts caused the doubling of revenues is like a rooster claiming credit for the dawn.
Furthermore, the receipts from individual income taxes (the only receipts directly affected by the tax cuts) went up only 91.3 percent during the 80's. Meanwhile, receipts from Social Insurance, which is directly affected by the FICA tax rate, went up 140.8 percent. This large increase was largely due to the fact that the FICA tax rate went up 25% from 6.13 to 7.65 percent of payroll. Hence, the claim that the doubling of TOTAL revenues proves the effectiveness of tax cuts is including revenues which resulted from a tax hike to prove the effectiveness of a tax cut. This seems like the height of hypocrisy. For a further discussion of Reagan tax cuts, see that analysis at http://home.att.net/~rdavis2/taxcuts.html.
Regarding the Bush tax cuts, the following graph shows the 3-month trailing averages for receipts, outlays, and deficits since 1998:
The numbers and sources can be seen at http://home.att.net/~rdavis2/mts.html. As can be seen, revenues from individual income tax receipts dropped sharply following the 2001 tax cut. Oddly, Moore and all other supply-siders appear to have lost all memory of this tax cut. Revenues do appear to have started a recovery in late 2003 or early 2004. To what degree this recovery is due to the 2003 dividend tax cut and to what degree it is just the normal recovery from a recession is debatable. In any event, this says absolutely nothing about the merit in cutting the marginal tax rate.
The fact that we are below the tax rate that will bring in maximum revenues is NOT an argument for raising taxes. However, we need to get away from these free-lunch schemes that are rampant in the world of politics.