For the most part, the poor are less educated, less experienced, and have less access to capital. These three factors are crucial in creating a comparative advantage over others, thus making the poor’s comparable advantage much smaller. The greater the comparative advantage, the longer you can overcome higher tax rates.
The Laffer Curve
A business owner who has proven to create wealth, not just for themselves but also for all the people whom they hire and purchase product from, are too often discouraged from expanding or starting a business because of high tax rates. Many of these successful businessmen have already acquired wealth and can have a good lifestyle without working. Higher tax rates discourage businessmen from benefitting all of his would-be employees.
Supply and Demand
An ever growing tax rate continues to discourage businessmen from starting businesses and employing people. Having a decreasing level of jobs and a steady number of people needing to work drives down wages when people offer their labor services for less so as not to be out of a job.