The government proposes to reduce the tax on income earned


Suppose that the labor supply of married women is very sensitive to the after-tax wage (that is, it is very elastic), whereas the labor supply of men is not. The government proposes to reduce the tax on income earned by married women by 5 percent. and to raise by 15 percent the tax on earnings of married men. How would this tax change affect total tax revenues? How would it affect the distribution of income?

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Econometrics: The government proposes to reduce the tax on income earned
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