Supply-side economists argue that a cut in personal income tax rates would
A)decrease government revenues
B)increase government revenues
C)have no impact on government revenues
D)increase unemployment
E)decrease economic growth

Question

Quizplus · Accepted Answer

Supply-side economists argue that a cut in personal income tax rates would incentivize individuals to work harder and invest more, leading to increased economic growth and ultimately higher government revenues. This theory is based on the idea that the increased economic activity generated by tax cuts will result in an increase in the tax base, which would offset the initial loss of revenue from lower tax rates. However, the actual impact of tax cuts on government revenues is a matter of debate among economists, and different studies have produced conflicting results.

Supply-Side Economists Argue That a Cut in Personal Income Tax