A flat tax is a tax on income at the same rate for everyone regardless of how
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A flat tax is a tax on income at the same rate for everyone regardless of how much income they earn. Estonia reduced its rate of flat tax from \(21 \%\) in 2014 to \(20 \%\) in 2015 . What effect can such a tax rate reduction be expected to have on hours worked and tax revenues? Explain your answer in terms of income, substitution, and total effects.
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When the flat tax rate is reduced there are income substitution and total effects that can impact hours worked and tax revenues 1 Income Effect The in...View the full answer
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