This is essentially saying the same thing that Laffer (who was recently in Toledo BTW) graphically illustrated with his famous "curve." As tax rates rise there is an ever decreasing incentive to work and increase productivity.
Let's say a computer programmer freelances and makes $200/hour writing code. The moment he crosses into a higher tax bracket his take-home pay drops, and at a point he realizes that he no longer makes $200/hour but rather $110/hour. He may decide to stop working at that point becaues he would rather play golf or watch tv or hang out with his wife. His income suddenly comes to a halt and so do his income tax payments. In this case the government would have been better served to have a lower tax rate that would have encourage the computer programmer to continue working.
This one is personal because it is actually my life (or at least will be in a few years). In a 3 or 4 years I'll be a practicing physician no longer in training. I will also be married to a nurse. As such I will be blessed to be in a high marginal tax bracket. Because of that my wife's income will immediately be slashed by about 50% (including city, state, federal, and FICA). So instead of making $23/hour she'll effectively be making $12/hour. That's probably not going to be enough to motivate her to work full-time. She'll probably work a shift or two a week to prevent boredom from setting in, but she would rather stay at home with the kids for the other shifts she would normally work. When she cuts her shifts the government loses out on her income tax money. The hospital also loses out because they suddenly have unfilled nursing slots (that can't be filled because of the nursing shortage).
Of course, not every nurse or computer programmer will stop working at the same point. 30% tax rates may be enough for some people to stop working while others wouldn't stop working until they hit a 70% tax bracket if it existed. However, as tax rates increase the cummulative effects of people cutting back on hours begins to add up. While the people that continue to work will pay a higher percentage of their income, there will be fewer people working. As tax rates rise there are diminishing returns on the tax increase, and at some point a tax increase will actually result in less tax income from coming in (see how many people work if you tax them at 90%).