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Lunna [17]
3 years ago
13

What is the correlation between a tax rate of zero and a tax rate of 100% government?

Social Studies
1 answer:
Alex73 [517]3 years ago
3 0

Answer:

The correlation between a tax rate of zero percent, and a tax rate of 100% is that in both cases the government would collect exactly zero taxes.

Explanation:

The reason for this at the 0% rate is self-explanatory: if the government does not impose any taxes, it will obviously collect zero tax revenue.

However, the explanation for this case at the 100% is a bit more elaborate. At a 100% tax rate, incentives to work and earn income would radically change. In other words, people would have no incentive to do so because the government would charge a tax for 100% of their income. For this reason, they would either abandon employment, or find ways to avoid the tax. This would eventually result in zero tax revenue for the government.

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