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Laffer Curve : Tax Rate and Tax Revenue
Question:
- Do raising tax rates necessarily raise tax revenue? What factors affect how tax revenue changes when tax rates change?
- Using the ‘human capital’ investment model, analyse the ways in which increases in university fees will affect participation in higher education for students with different abilities and students from different backgrounds. How will loans affect this?
- If incentive contracts are really effective, why do so many workers receive flat rates of pay?
Summary: The essay answers the above three questions by explaining the relationship between tax rate and tax revenue through the Laffer curve.
Word limit - 2000 words
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