If the (average)tax rate falls by 10% and as a result the tax base rises by 8%,then tax revenues will

Question

Quizplus · Accepted Answer

The tax revenue is calculated as the product of the tax rate and the tax base. A 10% decrease in the tax rate and an 8% increase in the tax base will result in an overall decrease in tax revenue because the percentage decrease in the tax rate is greater than the percentage increase in the tax base.

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