Question

What is Supply Side Economics? Do you think that reducing taxes and tax rates can actually increase government revenue? Why or why not??

Answer 1

Supply side economics : supply side economics is the theory which explains how reduction in the taxation increases the growth of the economy: the decrease in tax rates increases the people who will be covered under the taxation which increases tax revenue as more people pay the taxes. The supply side economics theory explains that the decrease in tax rates motivates the people to work more as they have to pay less portion of their income as a tax which increases productivity in the economy. the economic activities increases which leads to the growth of the economy and also controls the inflationary pressure in the economy.

Yes the reducing taxes and tax rates can actually increase government revenue because it will cover more people under taxation and also it will motivate people to pay taxes as they have to pay less amount from their income. Also the low tax rates increases people’s incentive to work and invest more which increases economic productivity and the revenue of the government increases