Which of the following statements is TRUE?

Question

Quizplus · Accepted Answer

The Laffer curve shows that tax revenues will eventually decrease if tax rates are too high or too low. Therefore, not knowing where the economy falls on the Laffer curve means that the effects of changing tax rates are uncertain. A) is false because a 100% tax rate would lead to no incentive for individuals to work or invest, therefore tax revenues would be zero. C) is false because low marginal tax rates actually have positive incentive effects on work effort. D) is false because high marginal tax rates can lead to disincentives to work as individuals may feel they are not being rewarded for their extra effort.

Which of the Following Statements Is TRUE