For decreases in wage taxes, substitution effects put negative pressure on tax revenues while wealth effects put positive pressure on tax revenues.

Name: For decreases in wage taxes, substitution effects put negative pressure on tax revenues while wealth effects put positive pressure on tax revenues.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Substitution effects encourage more work due to lower taxes, potentially increasing tax revenues, while wealth effects may lead to less work, reducing tax revenues.

For Decreases in Wage Taxes, Substitution Effects Put Negative Pressure