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Zanzabum
2 years ago
12

Which of the following statements about taxation is TRUE?

Business
1 answer:
xeze [42]2 years ago
4 0

Answer:

A. There is a tax rate at which tax revenues are maximized.

Explanation:

By Laffer Curve definition we can easily understand the relationship between tax rate and tax revenues. It was developed by Arthur Laffer. The Laffer Curve describes that:

  • with an optimal tax rate government maximizes total  tax revenues
  • there is no tax revenue collection at the two extreme tax rates of 0% and 100%
  • at the left side of the curve higher tax rates decrease the incentive to work and invest. As a result this leads to to decrease in total tax revenue.

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