Other things equal,an increase in corporate income taxes will ________ the after-tax profitability of investment projects,which leads to ________ in output and employment.

Question

Quizplus · Accepted Answer

An increase in corporate income taxes will decrease the after-tax profitability of investment projects, which will lead to a decrease in output and employment. This is because higher taxes will lower the incentive for companies to invest, and they may choose to reduce investment and hiring instead.

Other Things Equal,an Increase in Corporate Income Taxes Will ________