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

Phillips curve in lowland, The Phillips curve in Lowland takes the form of ...

The Phillips curve in Lowland takes the form of ? = 0.04 - 0.5 (u - 0.05), where ? is the actual inflation rate and u is the unemployment rate. The Phillips curve in Highland takes

Demand and supply, The Australian government administers two programs that ...

The Australian government administers two programs that affect the market for cigarettes. First, media campaigns and labelling requirements aimed at making public aware of the dan

Aggregate demand and aggregate supply, Find one or more articles in the wal...

Find one or more articles in the wall street Journal or other business publications that describe changes in fiscal or monetary policies in the United States. Discuss how these pol

Overnight rates and interest rates with longer maturity, Q. Overnight rates...

Q. Overnight rates and interest rates with longer maturity? By controlling overnight interest rates, central bank will affect interest rates with longer maturity. Main reason f

Economic concepts models- demand/supply concepts, Questions: ...

Questions: Search through newspapers for ONE article that is relevant to the economics concepts. You are also required to attach the article to your final report

Describe an algorithm which gives initial amount , This problem involves th...

This problem involves the question of computing change for a given coin system. A coin system is defined to be a sequence of coin values v1 (a) Let c ≥ 2 be an integer constant

State the appropriate null and alternative hypotheses, Suppose a new produc...

Suppose a new production method will be implemented if a hypothesis test supports the conclusion that the new method reduces the mean operating cost per hour. a. State the appro

How can we define the real wage as nominal wage, How can we define the real...

How can we define the real wage as nominal wage We define real wage as nominal wage divided by a price index (typically CPI). In the illustration above, your real wage was 20 i

Game Theory, A, Explain how a person can be free to choose but his or her c...

A, Explain how a person can be free to choose but his or her choices are casually determined by past event 2 B , Draw the casual tree for newcomb''s problem when Eve can''t perfe

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