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Answer to Question #140963 in Economics for hrrdv

Question #140963
Explain two reasons why an increase in unemployment may reduce tax revenue.
1
Expert's answer
2020-11-02T07:05:57-0500

The first reason is a decrease in tax deductions from wages, since the unemployed do not pay taxes.

The second reason is the decline in consumer demand. The amount of tax deductions from business owners who produce goods is reduced.


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