> If you make the tax too high it starts discouraging the behavior you're taxing, which can paradoxically reduce overall tax revenue.
The Law of Supply and Demand is not a paradox.
> If you make the tax too high it starts discouraging the behavior you're taxing, which can paradoxically reduce overall tax revenue.
The Law of Supply and Demand is not a paradox.
You could maybe somehow relate it to supply and demand dynamics, but the idea that that higher taxes can start reducing receipts after a certain point is widely credited to Laffer (although apparently there are signals of others saying similar things throughout the history of economics). The Laffer model displays an inverted U curve.
The Laffer curve is a result of the Law of Supply and Demand.
It's no different than increasing the price of X causes the sales of X to go down.