WILL TAX REVENUE NECCESSARILY RISE IF TAX RATES ARE LOWERED? EXPLAIN YOUR ANSWER.
This depends on whether or not you are a supply-side economist and believe in the idea of the Laffer curve. It is one of those things that cannot really be proven because there are too many intervening variables.
If you say yes, it is because you believe that a lower tax rate will inspire people to work more (and companies to produce more) because they are getting to keep more of their money. This will mean that income will increase and so will tax revenues.
If you do not believe this, you would say that the supply of labor and of most other products is pretty much set and will not increase much in response to a tax cut.
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