On January 1,2013 the income tax rate for single taxpayers making more than $400,000 per year increased from 35 percent to 39.6 percent.This tax increase ________ potential GDP.

Question

Quizplus · Accepted Answer

The tax increase would decrease potential GDP as it would reduce the incentive for high-income earners to work and invest, leading to a decrease in aggregate supply and less economic growth.

On January 1,2013 the Income Tax Rate for Single Taxpayers