Playing off Arthur Laffer’s groundbreaking work on tax rates and revenue generation, a recent article from popular PJ Media blogger "Zombie" theorizes that wealthy, left-leaning donors will abandon President Barack Obama if he continues to double down on the whole anti-"1 percent" thing.
Named after the famous “Laffer Curve," they're calling it the "Lovitz Curve."
But perhaps we should explain a little bit more about the "Laffer Curve." Let’s turn to the Zombie's article for a simple and succinct explanation:
...the Laffer Curve was a brilliantly simple economic graph which demonstrated that government revenue grows as taxes are increased only up to a certain point, after which revenues begin to decline as tax rates approach 100%.
The high point on the graph (below) represents the optimum rate of taxation. Anything left or right of center results in a reduction of generated revenues.
But what’s the reasoning behind Laffer’s proposition? Again, we turn to Zombie for the explanation:
Obviously if tax rates are 0%, then the government will collect no tax revenue; but if tax rates are 100%, then the government will almost certainly also collect no tax revenue, because there would be no motivation for anyone to work, earn or invest, since all their income would go directly to the government.
A tax rate of 100% may sound tempting at first, but since it would precipitate an economic collapse, the end result would be no economic activity to tax, and thus no revenue. Therefore, the most effective tax rate is somewhere in the middle.
So now that we understand how the "Laffer Curve" works and the theory behind it, we can turn to the "Lovitz Curve."
Zombie came up with the "Lovitz Curve" after actor and comedian Jon Lovitz, a professed Democrat and supporter or President Barack Obama, went off on his now-famous “bulls**t” rant against the president’s economic policies.
Apparently, the whole “fair share," "play by the rules," and let's tax "millionaires and billionaires," thing can be taken too far. Lovitz and a few other left-leaning Hollywood types (who he says are too afraid to speak out) are finding their breaking point, or so says the article.
The "Lovitz Curve" argues that that many in people in Hollywood and other affluent, left-leaning areas of America enjoy, support, and appreciate rhetoric that rails against “corporate fat cats” and the greedy “1 percent.” However, the confiscation of wealth via high taxes will eventually include the Hollywood types.
“Wealthy West Coast liberals will cheer on and swoon over any politician who engages in overheated class warfare rhetoric — up until a certain point, when it suddenly dawns on them that the rhetoric is aimed directly at themselves,” the article points out.
“Then very quickly their donations, fundraisers and helpful propagandizing start to dry up as the radical rhetoric begins to threaten them personally,” the article adds.
So based on the theory that left-leaning celebrities will only support anti-wealthy dialogue to a certain point, we present Zombie’s "The Lovitz Curve":
“[T]he Lovitz Curve is going to be a rude awakening for the Obama campaign,” the article adds.
He and his strategists had thought that they could amp up the class warfare rhetoric to the absolute maximum and still count on unquestioned support and unlimited donations from the Hollywood elite. But Jon Lovitz’s game-changing rant brought them crashing down to Earth; turns out that the wealthy liberals have acquired a taste for luxury, and their guilt-assuaging support for the proletariat has a limit. Obama unwittingly crossed that line, and he learned the hard way that the curve’s drop-off…is steep and pitiless as you approach Leninhood.
Now although the graph and the idea behind it is pretty humorous, it raises a good question: At what point will wealthy Democrat donors realize that a lot of this amped-up, anti-“1 percent” rhetoric will eventually be aimed at them?
Will they realize the implications of anti-wealthy rhetoric and have their own Lovitz-style rant, or will they continue to go on supporting the White House's crusade against people who aren’t “paying their fair share”?
By the way, Zombie has another variation of the "Lovitz Curve" he says is more accurate. See it here.
This article has been updated.