Question

In: Economics

How would raising marginal tax rates (lowering the wage)affect low-income workers differently than high- income workers?

How would raising marginal tax rates (lowering the wage)affect low-income workers differently than high- income workers?

Solutions

Expert Solution

High marginal tax rates or increase in marginal tax rates can make it quite difficult for the low income workers where it gets to create a poverty trap for the people as there'll be no incentives to increase their wages on the whole. However there might not be significant effect on the high income workers as such on the whole.


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