On the Laffer curve,an increase in tax rates causes tax revenue to increase if the starting point is

Question

Quizplus · Accepted Answer

When tax rates are at low levels (to the left of the top of the Laffer curve), increasing tax rates will lead to an increase in tax revenue as people are still willing to work and invest. However, when tax rates are at high levels (to the right of the top of the Laffer curve), increasing tax rates will lead to a decrease in tax revenue as people are discouraged from working and investing. Therefore, the best choice is C, as increasing tax rates from this starting point will still lead to an increase in tax revenue.

On the Laffer Curve,an Increase in Tax Rates Causes Tax