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Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383

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BuyFindarrow_forward

Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383
Textbook Problem

Economist A believes that a reduction in tax rates will lead to increased tax revenue, and economist B believes that a reduction in tax rates will not lead to increased tax revenue. What does each believe with respect to the relationship between the percentage change in tax rates and the percentage change in the tax base?

To determine

Relationship between tax rate and tax base.

Explanation

The size of the income tax revenue depends upon the tax rate and the tax base (income slab). The relationship between tax rate and tax base suggested by both economists “A” and “B” are different...

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