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Congress would like to increase tax revenues by 30 percent. Assume that the average taxpayer in the United States earns $88,000 and pays an average
Congress would like to increase tax revenues by 30 percent. Assume that the average taxpayer in the United States earns $88,000 and pays an average tax rate of 19.5%. If the income effect is larger than the substitution effect, what average tax rate will result in a 30 percent increase in tax revenues? This is an example of what type of forecasting?
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