Lower tax rates, Macroeconomics

Assignment Help:

Is it true that government revenues are increased because of lower tax rates?

Ans) It is true to a point. The Laffer curve determines that revenues enhance as the tax rates rise (0 tax rate = 0 revenue) up to a point, but the enhance slows as the rate rises higher and at some point total revenue starts to decline. If your incremental tax rate is 1% and you can work 4 hours to make $100, you will get to keep $99 and most people would be willing to do this. You would probably will to work the additional hours if you were taxed 5 or 10%. Though, if you were subject to an incremental rate of 99%, you would not work that long knowing the government was only going to let you stay $1. The "magic number" seems to be somewhere around 15-20%. If the rates are above this, people are not motivated to enhance their earnings. Big corporations react the similar way.

 


Related Discussions:- Lower tax rates

Trade-fdi nexus, Trade-FDI Nexus: Economic liberalization promotes bot...

Trade-FDI Nexus: Economic liberalization promotes both trade and FDI. FDI could be export-promoting, import substituting or import enhancing depending upon supply and demand f

Short-run framework, What is the difference between the short-run framework...

What is the difference between the short-run framework and the long-run framework? Discuss how each relates to supply and demand.

Interest rates, what is real and norminal interest rates?

what is real and norminal interest rates?

Total cost of linear equation, The total cost C of producing x units of som...

The total cost C of producing x units of some commodity is a linear function. Records show that on one occasion, 100 units were made at a total cost of $200, and on another occasio

Explain about household savings, Q. Explain about Household savings? Re...

Q. Explain about Household savings? Remember that consumption may refer to observed consumption as well as to demand for consumption. The same is true for 'household savings',

Classical and non-classical model, what is the difference between classical...

what is the difference between classical and non-classical model

Toms price elasticity of demand, Two drivers --- Tom and Jerry --- each dri...

Two drivers --- Tom and Jerry --- each drives up to a gas station. Before looking at the price, each places an order. Tom says, "I'd like 10 gallons of gas." Jerry says, "I'd like

Explain money market with inflation, Q. Explain money market with inflation...

Q. Explain money market with inflation? The money market with inflation  Let's begin with the money market diagram and introduce inflation. As M D relies positively on P

Illustrate the overview and importance of macroeconomics, Illustrate the ov...

Illustrate the overview and importance of macroeconomics? After familiar with this illustration, able to know: a. An overview of macroeconomics is the study about the econom

Chartered a bus to atlanta, A group has chartered a bus to Atlanta. The dri...

A group has chartered a bus to Atlanta. The driver costs $200, the bus costs $500, and parking in Atlanta will be $90. You have already paid $700 to reserve the bus and a driver. T

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd