I was discussing the Laffer curve with a friend of mine who is a big fan of Milton Friedman and Laffer himself. I know there are several Austrian critiques of the Laffer curve, but one of my critiques against it was that it assumes that maximizing government revenue is also what is best for the economy.
In other words, the Laffer curve was explained that the government should find that tax rate that is “just right,” so as to not stifle growth and shrink the tax base, but to get as much as it can up until that point. My observation was that the government maximizing its revenue is a bad thing for the economy, because anything that the government takes in is necessarily lost from the private sector and incurs opportunity costs.
My friend was adamant that the right tax rate, which he said was lower than it is now, would be optimal for growth and to support government functions. I said ANY tax is necessarily a sap on economic growth. My friend looked at me as if I had suddenly started speaking Swahili.
Query: am I on the right track? Is there a better way to explain this? This friend is a conservative who is starting to come around to libertarian/Austrian precepts (against the Fed, gold standard, etc.), but does not seem quite ready to let go of some of the monetarist leanings.