Author Question: What is meant by revenue-neutral tax reform? How might agreeing to revenue-neutral tax reform help ... (Read 73 times)

jake · **on:** Jul 1, 2018

What is meant by revenue-neutral tax reform? How might agreeing to revenue-neutral tax reform help lead to a more efficient tax system?

What will be an ideal response?

Question 2

Homer's Donut Shoppe has the production function q = 10L +20L2 - 5L3. The average product of labor is

A) AP = 10 + 20L - 5L2
B) AP = 10 + 40L - 15L2
C) AP = 10L
D) AP = 10 + 20L

paavo · **Reply #1 on:** Jul 1, 2018

Answer to Question 1

Revenue-neutral tax reform means changing the tax system in some ways but keeping the amount of tax revenue collected constant. Agreeing to revenue neutrality when attempting to change the tax structure might help lead to a more efficient tax system by allowing legislators to focus on efficiency concerns without being sidetracked into debates over the overall level of taxation.

Answer to Question 2

A