Tax Revenue and Economic Performance Analysis

What is the optimal rate of taxation? Economic literature is divided on the optimal marginal rate of taxation о Range is somewhere between 0 and 100% 。 As income taxes get higher, more likely that people leave the work force or leave the tax jurisdiction Consideration: as you raise income tax, people may substitute labor with capital о о Receive equity compensation (taxed at capital gains) Increase use of C and S corporations (Gordon and Slemrod '00) There is a trade off between equity and efficiency 4

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