If the (average)tax rate falls by 10% and as a result the tax base rises by 20%,then tax revenues will

Name: If the (average)tax rate falls by 10% and as a result the tax base rises by 20%,then tax revenues will
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Question

Quizplus · Accepted Answer

A decrease in the average tax rate increases the incentive for individuals to work and invest, leading to an increase in the tax base. The 20% increase in the tax base more than compensates for the 10% decrease in the tax rate. Therefore, tax revenues will rise.

If the (Average)tax Rate Falls by 10% and as a Result