When the tax rate increases,the tax revenue

Question

Quizplus · Accepted Answer

The relationship between tax rate and tax revenue is not always straightforward. If the tax rate is already high, further increases may cause taxpayers to change their behavior and reduce their taxable income or engage in tax avoidance, leading to a decrease in tax revenue. On the other hand, if the tax rate is very low, increasing it may incentivize taxpayers to increase their taxable income, leading to an increase in revenue. Therefore, the answer is that tax revenue may increase or decrease, depending on the circumstances.

When the Tax Rate Increases,the Tax Revenue