Use the following news clip to work Problems 1 and 2.

Paul Ryan's Roadmap Business Tax

Paul Ryan has proposed replacing the corporate income tax, which is among the highest in the industrialized world, with what he calls a business consumption tax but what is in effect a tax of a firm's value added. He proposes that this tax be set at 8.5 percent, which is half that of the value-added taxes in the rest of the industrialized world.

Source: A Roadmap for America's Future, http://roadmap.republicans.budget.house.gov/

1. Explain the potential supply-side effects of Paul Ryan's tax plan. Mr. Ryan's plan
2. Where on the Laffer curve do you think Paul Ryan believes the U.S. economy lies? Explain your answer. (please draw the Laffer Curve)