Dynamic tax analysis is based on the recognition that as tax rates are increased

Question

Quizplus · Accepted Answer

Dynamic tax analysis recognizes that as tax rates are increased, there will be a change in behavior by taxpayers. This change in behavior can include reduced investment, decreased productivity, and increased tax evasion. As a result, tax revenue collections will eventually decline, despite the initial increase in revenue due to the higher tax rates.

Dynamic Tax Analysis Is Based on the Recognition That as Tax