A higher marginal income tax rate reduces incentives to work because

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Business

Guest

1 April, 01:29

A higher marginal income tax rate reduces incentives to work because

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Joselyn · Answer 1

An increase in the marginal income tax rate is likely to decrease the quantity of labor supplied. because the increase in the tax automatically reduces the profit of the firm. the management will always try to compensate their loss by taking necessary reforms or measures. the first and simplest method to reduce the loss is to cut down the expense by reducing the labour involved.