Laffer curve
Named after Arthur Laffer, an American economist, this curve shows tax revenues increasing as tax rates rise from zero but starting to fall when tax rates reach a certain level, because high taxes discourage work and enterprise. The argument is often cited by conservative politicians in America and Britain, and is probably true in principle. But it is not clear where the bend in the curve occurs (see this article), and it may be at tax rates much higher than current levels.
