In high school, I heard there was a weekly poker game in an older house near the bowling alley. I wasn't old enough to check it out even if I'd had the inclination. What had caught my attention was a report that you received $18 worth of chips for a $20 bill. I was surprised to learn that players started the game in the red. That was confidence. You had to win to just break even.

That $2 that literally went to the house was a tax for playing. How many players would have anted in if the tax was $4? $5? $10? Economics tells us that the number would have diminished with each increase in the house "tax."

Economics goes a little further on taxes. Taxes have a negative effect on economic growth. As with the poker players, increasing taxes diminishes the incentives to invest.

That doesn't completely abolish the case for taxes though. Taxes are necessary to fund government and to provide basic services. It is a bit of a paradox but those economy-repressing taxes have a positive economic effect when reinvested by government. The standard of living in America is high because of the quality roads and education and health protections and much more provided by government and our tax monies.

So what is the happy median between too much tax that robs the individual's inclination to invest and too little tax to enable government to provide the basic services that support economic growth? Somewhere in between is the balance that drives economic performance at the optimal level. Too little and nothing happens, and too much stanches growth.

The Laffer Curve Source: Wikipedia

The Laffer Curve, per Wikipedia, shows "the concept of Taxable income elasticity, the idea that government can maximize tax revenue by setting tax rates at an optimum point." It is the basic concept used to explain how cutting taxes can increase tax revenues. More people are encouraged, even enabled, to invest and the return in tax revenue is greater. It may seem counterintuitive at first.

It begs the question: Do the cities with higher tax bases and success near Garland have lower tax rates because their success allows lower taxes or does lower taxes allow higher success? A look at those cities with higher tax rates than Garland doesn't inspire confidence in high tax rates.

I don't know that answer. I suspect it is not as simple as many believe.

The curve also illustrates Garland's delimma. A tax rate too high and we discourage investment—we slow housing sales, new business growth, and decrease tax revenue to the city. Not high enough and we can't deliver the quality of life that keeps and attracts new residents and investment.

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