Explain what these critics meant

Reference no: EM131314598

In 2005, President Bush's tax reform commission proposed and Congress enacted a decrease in taxes. One of the cuts was in the income tax rate for higher-income wage earners. Republicans claimed that raising the rewards for working (the net after-tax wage rate) would lead to more work effort and a higher labor supply. Critics of the tax cuts replied that this criticism was baseless because it "ignored the income effect of the tax cut (net wage increase)." Explain what these critics meant.

Reference no: EM131314598

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