If a person predicts that a cut in income tax rates will decrease income tax revenues,he or she implicitly assumes that the percentage __________ in the tax base will be __________ the percentage cut in the tax rate.
A) rise; less than
B) rise; greater than
C) rise; equal to
D) fall; equal to
E) none of the above

Question

Quizplus · Accepted Answer

This assumption is based on the idea that the decrease in tax rates will not lead to a sufficient increase in income or taxable income (the tax base) to offset the lower rates, resulting in lower overall tax revenues.

If a Person Predicts That a Cut in Income Tax