we find that the US. can increase tax revenues by 30% by raising labor taxes but

Question

we find that the US. can increase tax revenues by 30% by raising labor taxes but only 6% by raising capital income taxes, while the same numbers for the EU-14 (European Union economies) are 8% and 1% respectively." 16. Economists Matthias Trabandt & Harald Uhlig One can conclude from the research of these economists that ft side of its Laffer Curve forl B. The U.S. is on the left side of its Laffer Curve for both labor taxes and capital income taxes c. Neither the U.S. nor the EU-14 is on the left side of its respective Laffer Curve for either labor taxes or for capital income taxes. D. The EU-14 economies are on the left side of their combined Laffer Curve for labor taxes but not for capital income taxes.

Explanation / Answer

Answer.) B.) The U.S. is on the left side of its laffer curve for both labor taxes and capital income taxes.

The Laffer Curve show the relationship between tax rates and the amount of tax revenue collected by governments. The curve is used to illustrate that the more an activity such as production is taxed, the less of it is generated. Likewise, the less an activity is taxed, the more of it is generated.

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