Question

Which of the following curve shows that incessant increase in tax rates is not productive?

Q: Answer-Which of the following curve shows that incessant increase in tax rates is not productive?

The Laffer curve shows the relationship between tax rates and tax revenue collected by governments. The curve suggests that, as taxes increase from low levels, tax revenue collected by the government also increases. It also shows that tax rates increasing after a certain point T would cause people not to work as hard or not at all, thereby reducing tax revenue. Eventually, if tax rates reached 100 the far right of the curve, then all people would choose not to work because everything they earned would go to the government.