What would tax revenue be at a 0% income tax rate

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a. Study the four accompanying diagrams. Consider the follow- ing statements and indicate which diagram matches each statement. Which variable would appear on the horizontal and which on the vertical axis? In each of these statements, is the slope positive, negative, zero, or infinity?

b. What would tax revenue be at a 0% income tax rate?

c. The maximum possible income tax rate is 100%. What would tax revenue be at a 100% income tax rate?

d. Estimates now show that the maximum point on the Laf- fer curve is (approximately) at a tax rate of 80%. For tax rates less than 80%, how would you describe the relation- ship between the tax rate and tax revenue, and how is this relationship reflected in the slope? For tax rates higher than 80%, how would you describe the relationship be- tween the tax rate and tax revenue, and how is this rela- tionship reflected in the slope?

Reference no: EM13900551

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