Laffer explained this on a napkin long ago.
IOW, sometimes increasing taxes increases revenue and sometimes increasing taxes decreases revenue.
So if we're close to T4 above and we increase taxes we will decrease revenue.
Now if we're at T4 above and we decrease taxes, what will happen?
Why?
https://www.investopedia.com/terms/l/laffercurve.aspLaffer countered that the more money was taken from a business out of each additional dollar of income in the form of taxes, the less money it will be willing to invest. A business is more likely to find ways to protect its capital from taxation or to relocate all or a part of its operations overseas. Investors are less likely to risk their capital if a larger percentage of their profits are taken. When workers see an increasing portion of their paychecks taken due to increased efforts on their part, they will lose the incentive to work harder. Put together these could all mean less total revenue coming in if tax rates were raised.