Disadvantages of progressive tax, Managerial Economics

Disadvantages

  • The effect on incentives

High  progressive tax makes work and extra effort become less valuable.

  • The effect on the willingness to accept risk

High marginal rates of tax are likely to make entrepreneurs less willing to  undertake risks.

  • Effects on mobility

Some financial inducement is usually required if people are to be asked to change their location, or undergo training, or accept promotion.  Progressive taxation by reducing differentials is likely to have some effect on a person's willingness to any of the above.

  • Encourages tax avoidance and evasion.
  • Outflow of high achievers to other countries with lower Marginal tax rates.
  • It can lead to fiscal-drag where wage and price inflation cause people to pay higher proportion of income as tax.
Posted Date: 11/30/2012 3:16:31 AM | Location : United States







Related Discussions:- Disadvantages of progressive tax, Assignment Help, Ask Question on Disadvantages of progressive tax, Get Answer, Expert's Help, Disadvantages of progressive tax Discussions

Write discussion on Disadvantages of progressive tax
Your posts are moderated
Related Questions
Calculate point elasticity of demand for demand function Q=10-2p for decrease in price from Rs 3 to Rs 2.

In the city of Gelato the market for ice cream is perfectly competitive. Aggregate demand for ice cream is: where p is the price for one cone of ice cream. All ice cream pr

WAGE DETERMINATION, POLICY AND THEORIES Wages and salaries are rewards to labour as a factor of production of goods and services.  In ordinary speech a distinction is frequent

Tomato Farm is selling tomatoes in a purely competitive market. Its output is 5000 bushels, which sell for $15 a bushel. At this level of output, the marginal cost is $15 bushel an

Profit as rent of ability: one of the most widely known theories of profit was propounded by F.A. Walker. According to him profit is the rent of is the difference between the earn

Describe the Optimisation of managerial economics Optimisation techniques are perhaps the most vital to managerial decision making. Given that alternative courses of action are

Suppose that there is a fixed sum of money available to be spent on public projects, and that a large number of public projects have been evaluated using social cost-benefit analys

Using the relationship among the price of a visit to a physiotherapist and the quantity of visits demanded, explain and distinguish between the direction, the slope, and the positi

A chemical producer dumps toxic waste into a river. The waste decreases the population of fish, decreasing profits for the local fishing industry by $100,000 per year. The firm cou

define scarcityand oppurtunity cost.show how these concepts are useful in managerial decision making