Arthur Laffer argued through the Laffer Curve that excessive income tax rates reduced revenue by discouraging work

In his explanation of the Laffer curve, Arthur put to light the effect that was observed on the effects that taxation as a tool had on the economy. His belief circles around the fact that there in the initial phases the generation of the revenue of the center is dependent on the growth of the tax impositions, as there is no other way for an economy to function without a government. But at the same time, the gradual increase in the amount imposed will give a setback to the growth that the economy can achieve. The tax is being derived from the pocket of the consumers and if they are unable to carry out various economic activities such as spending, the other macro variables like output and so on will suffer.

On the other hand, Milton found this situation uncertain, he argues about the same on the basis that the idea of introducing tax cuts that were popularized by the supply side economics was not beneficial for the economy as not considering taxes while calculating revenue would directly bring about a decrease in it, which will only worsen the deficit situations.

Therefore, it can be understood from this analysis that these two economists, stood poles apart on their understanding of the effects of tax cuts on the economy.