The announcement of an income tax cut for the top income earners from 45% to 40% by the previous Conservative Government in UK was very controversial. From an efficiency point of view was there any merit to this? Explain using a model of your choice.

The announcement of an income tax cut for the top income earners from 45% to 40% by the previous Conservative Government in UK was very controversial. From an efficiency point of view was there any merit to this? Explain using a model of your choice.

Microeconomics

13th Edition

ISBN:9781337617406

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter18: Public Choice And Special Interet Group Politics

Section18.3: Voters And Rational Ignorance

Problem 3ST

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Step 1: To evaluate the effectiveness of the income tax reduction for high-income earners from 45% to 40%

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Step 2: Laffer Curve Theory

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Step 3: Explanation of the Tax Cut

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Step 4: Potential Efficiency Gains

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Step 5: Consideration of Criticisms

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