All it says is that there is a tax rate that optimizes tax revenues. Laffer used the variable T* (optimum tax rate) to describe this sweet spot.
This is what it looks like...although Laffer himself says he never drew it on a napkin because the restaurant they were in when he drew the curve used cloth napkins, and he was brought up to not ruin nice things.
Look close at how this curve is formed. It's not linear. There are definite shoulders--steep regions on the extreme left and right sides--and plateaus--shallow regions close to the sweet spot. Draw a horizontal line where the curve drops from plateaus to shoulders. We'll call this the Jim Line.
You can see it better here...
Go to the point marked C. Note that the curve is starting to get really steep to the left of that point? There's your breakpoint, or Jim Line.
The Jim Line theory, which I just invented, says that you can use any tax rate between the low-side Laffer-Jim crossing point (the rate below the sweet spot at which Laffer's line crosses mine) and the high-side Laffer-Jim crossing point (same deal, just above the sweet spot) and still be okay. If you're between the sweet spot and the low-side crossing point your tax cuts will be self-financing or, more accurately, financeable through modest and acceptable spending cuts--what are popularly called "fat cuts." If you're between the sweet spot and the high-side crossing point, there may be a bit of grumbling but productivity will still be high, tax revenues will be good and you can start to pay down the debts you've accumulated.
Cross the Jim Line at your own peril.
If you go below the Jim Line (BJL) on the low side, you have created a non-self-financing tax cut situation. There are three ways to deal with this crisis--slash spending on important programs, sell a lot of government bonds, or keep raising the debt ceiling. None are sustainable.
Go below it on the high side, and the underground, non-taxed economy will flourish. Laffer's failure to acknowledge this part of the economy is the Laffer Curve's biggest failing. People will not stop working. They can't. People have to eat. They have to wear clothes, live in buildings, use transportation, be entertained...they can't stop doing all of those things just because the tax rate is too high. They CAN, on the other hand, cut their tax-paid work to a minimum (you can't completely stop working because the IRS knows Americans need money to live, and if you're not reporting any income you're getting paid exclusively under the table) and supplement this labor with jobs that don't report your income to the government. You know, stuff like auto repair and childcare. Now you're into a non-self-financing tax increase situation. This is worse because untaxed income is addictive. We're all familiar with stories about economic criminals who said they were going to make two or three million at whatever it is they were doing then go legit...and six years later they're sitting in jail after having earned twenty or thirty million. There aren't very many of these people, thank (insert deity here) for that...now change that to oh...eighty percent of the country. No one who starts making untaxed income if the tax rate is 75 percent is going to suddenly start reporting and paying if the rate drops to 37.5 percent. If the tax rate goes too high four-fifths of the nation will drop off the tax grid and you will never get these people back. This is when you'll see a national sales tax come in--if Johnny decides to start casting skateboard wheels in his garage and selling them over the Internet, you tax his raw materials because, in all likelihood, Johnny can't make his own urethane precursors.
Reagan, and GWB, both preferred BJL tax rates. Clinton's wisdom was in using above-Jim Line (AJL) rates--ones slightly high-side so as to pay down the deficit.
In reality, there's no way to plot on one graph the "optimal" tax rate range because tax rates are tiered.
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