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
Northern Lumber operates a large lumber-processing mill in a small town in Washington State.  It is one of the larger lumber producers in the region and has some market power in th

A baseball team is trying to predict ticket sales for the upcoming season. They are also considering increasing prices. The market has a population of 2 million persons. The team s

TYPES OF UNEMPLOYMENT   A  person  can  be  either  in the labour force  or  not  in  the  labour  force  of  an economy. The person not  included  in  the  labour force includ

LONG RUN EQUILIBRIUM FOR THE FIRM Since there is freedom of entry into the industry the surplus profits will attract new firms into the industry.  As a result the supply of th

is indian companies running a risk by not giving attention to cost cutting?

Real Rigidities in the Goods Market   The most important factor associated with real rigidity in  the goods market  is the existence of  imperfect  competition.  Imperfect comp

Determine a Specific Price of demand of product A proclamation concerning the demand of a product without mentioning its price is worthless. For instance, to state that demand

Q. Explain the Leibenstein model? Leibenstein (1966) sees a firm's norms or conventions, dependent on its history of management initiatives, labour relations and other  factors


Limitations of Uneven Distribution of Income and Wealth Unlike the historical experience of the now developed countries, the rich in contemporary Third World Countries are not