In October 2008, President Bush enacted the Alternative Minimum Tax Relief Act of 2008, which resulted in lower taxes on labor income. According the supply- side view, as a result of this act the incentive to work _ and the tax wedge _ .

Question

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According to the supply-side view, lowering taxes on labor income increases the incentive to work, thus leading to an increase in labor supply. This increase in labor supply would lead to a decrease in the equilibrium wage rate (tax wedge) in the labor market.

In October 2008, President Bush Enacted the Alternative Minimum Tax