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
gap between economic theory and business practice

Question: (a) The regression results for the quantity demanded of good X is given by ln Q X = 1220 - 9.5 ln P X - 2.21 ln P Y + 1.01 ln M t values (5.3)  (-5.1

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

Q. Explain the Efficiency wage model? Efficiency wage models such as Shapiro and Stiglitz (1984) suggest wage rents as an addition to monitoring, because this gives employees a

SHORT-RUN EQUILIBRIUM All firms are assumed to aim at maximizing profits or minimizing losses.  The monopolist controls his output or price, but not both. The monopoly maxi

The comparability principle Associations representing workers providing services - clerical, postal, teaching, etc. - have always attempted to  apply the "principle of comparab

Factors affecting the size of  National Income The size of nation's income depends upon  the quantity and quality of the factor endowments at its disposal. A nation will be ri

What is the equilibrium in the labor market? Explain briefly. Equilibrium in the Labor Market a. The market labor of demand curve is the horizontal total of the individual l

Q. Explain about Long run production function? Long run is a phase adequately long so that all factors together with capital can be changed. The factors that can be increase

Legal Sanction: A monopoly as stated above may be the result of a government sanction. The government of a country may legally permit a private monopoly or monopoly in the public s