Taxation and savings incentives in economic growth

Reference no: EM1373338

Q1. British Prime Minister Lady Thatcher planned a poll tax that levied an equal amount of tax on every citizen regardless of his or her income. This tax was repealed after a brief trial period. Why do you think this tax was unpopular? Discuss the pros and cons of the tax and arrive at a conclusive answer.

Q2. One strategy of long term growth is to give personal tax incentives for households to raise their personal savings. describe the rationale for this policy. Also examine the effect this policy might have in the short run on the following macroeconomic variables:

Economic growth
Interest rate
Investment demand
Government deficit

Reference no: EM1373338

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