Which effect on income tax collections is NOT indicated by the Laffer curve
A)Income tax collections will be very low if income tax rates are very low.
B)Income tax collections will be very low if income tax rates are very high.
C)Income tax collections will be at a maximum if income tax rates are at some intermediate level between very low and very high.
D)Income tax collections will be very high if income tax rates are very high.

Question

Quizplus · Accepted Answer

The Laffer curve suggests that extremely high tax rates can discourage income generation and tax compliance, leading to lower tax collections, not higher.

Which Effect on Income Tax Collections Is NOT Indicated by the Laffer