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
Q. Controlover Supply of Inputs - sources of monopoly? Furthermore, a monopoly situation may arise because of control over the supply of an essential input -skilled labour, raw

Factor combination in the long run In the long run it is possible to vary all factors of production. The firm is therefore restricted in its activities by the law of diminish

Individual firm and market supply curves The quantities and prices in the supply schedule can be plotted on a graph. Such a graph is called the firm supply curve. A fir

Keynes Theory Keynes views about trade cycle entitled notes on the trade cycle of his classic the general theory of employment interest and money published in 1936. Although K

Singapore Airlines  is facing the possibility of a new competitor " Qantas " to enter the Singaporean market, especially in premium market, Singapore Airlines is dominant on the ma

Q. Construction of an explanatory model? Construction of a sample:   To apply multiple regression a large sample is generally essential (ideally between 2,000 to 15,000 indivi

explain baumol''s sales maximisation model in detail

Find price for demand of 105000 exhaust fans, function is 462-5/7q for demand and p-6/7q for supply. find supply at 312, equilibrium qt and price

Discuss some of the effects of the economic downturn on supply, demand, inferior goods, complimentary goods, substitute goods, and price. words accepted#

Labor demand for low-skilled workers in the United States is w= 24 -0.1E where E is the number of workers (in millions) and w is the hourly wage. There are 120 million domestic U.S