Answer to Question #113447 in Macroeconomics for Abiah Kalim

Question

“Raising income tax will always create a budget surplus”. Evaluate the extent to which you agree with this statement. Use a laffer curve in your answer ( 15 marks)

Answer 1

As the tax rate increases, revenue collected by the government also increases.Eventually ,if ,the gorvenment experiences a budget surplus though all people would prefer not to work because all their eanings go straight to government.A budget surplus is a period where incomes exceed expenditure.when the gorvenment keeps on raising taxes ,then it will come to this point.