... someone of his supply side theory Draw the Laffer curve and ask what side of the curve are we on? Ask them what they think the highest tax rate was in the United States, they are usually shocked... took in the Fall of 2008 to decide on a fiscal policy to be used after the initial “bailout package.” The law-making lag can be substantial and the outcomes questionable! 137 138 CHAPTER 13 Additional... decrease in the tax rate on labor income b The demand for labor remains the same The demand for labor depends on the productivity of labor, which remains the same following the decrease in the tax