Answer:
When there's a recession, tax revenue falls.
A recession is usually associated with lower income so the tax paid falls.
For example, if income before recession was $500,000 And tax rate was 20%. The tax paid would be $100,000.
Now there's a recession and income falls to $200,000. Tax paid would be $40,0000.
Tax rate fell from $100,000 to $40,000
Explanation:
Automatic stabilizers adjust fluctuations in the economy automatically without the intervention of the government or policy makers.
Examples of automatic stabilizers are :
Progressive tax
Transfer payments
I hope my answer helps you
