What affect does the income tax have on consumption

Reference no: EM13235516

Suppose that the government imposes a proportional tax on the representative consumer's wage income. That is, the consumer's wage income is w (1 - t) (h - l) where t is the tax rate, and h is the working hours and l is the leisure hours. What affect does the income tax have on consumption and working hours?

Reference no: EM13235516

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