Quote:
Originally posted by taxwonk
My big disagreement with the Laffer curve is that I don't believe the demand for income is elastic. In fact, I personally believe it is the most inelastic thing in the world, with the possible exception of the demand for sex, and even sex has a refractory period.
Think about it for a moment. I demand for income were elastic, then why would anybody ever work once they had reached the point where their wealth was in excess of what they needed to support a couple of generations. And yet, Tiger Woods and Michael Jordan haven't retired. Nor has Warren Buffet and he's in his late 60s, isn't he?
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Huh? You mean you don't believe that the labor supply curve for individuals is backward bending? I don't see how the elasticity or inelasticity has anything to do with it. Either way, if the supply curve for labor always slopes up (i.e., higher wages will always induce more labor); it's just a question of how great the change is.
Also, using outliers to prove a theory isn't usually the best approach. It's a particularly poor approach when you use those examples: Tiger's playing a lot less tournaments. Michael retired from his sport. And warren Buffet is about to. And they all have other reasons to keep earning: competition, competition, and charitable works.
