According to the Laffer curve, higher tax rates will result in lower tax revenues if:

Question

Quizplus · Accepted Answer

According to the Laffer curve, higher tax rates can lead to a decrease in tax revenue if economic activity is severely discouraged. This can happen as people may be discouraged from producing, investing or working, resulting in a reduction in taxable income and eventually tax revenue. So, Option C is correct as it highlights the negative impact of high tax rates on economic activity.

According to the Laffer Curve, Higher Tax Rates Will Result