Illustrate what would be the impact on labor

Reference no: EM1336779

Shift in Tax Policy

Suppose the corporate income tax were eliminated and the revenue lost was made up by increasing the payroll tax rate on labor earnings. What would be the impact on labor and capital markets of such a shift in tax policy? What is the likely differential incidence of substituting a payroll tax for an equal-yield corporate income tax?

Reference no: EM1336779

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