Question
Using knowledge of after-tax engineering economic analysis on a company's investment decisions and the information in these articles relate how taxes can affect investment decisions,
Using knowledge of after-tax engineering economic analysis on a company's investment decisions and the information in these articles relate how taxes can affect investment decisions, also on the possible effects tax rates have on private investment versus government revenue. You may restrict the analysis to Federal taxes only.
-One area that might prove useful in an analysis of the Laffer Curve could be the tax increases recently put in place by the states of Connecticut and Maryland. Have the increased tax rates of those states decreased economic activity in those states? Congress recentlyreduced the Corporate tax rate from 35% to 21%,and used thelogic of the Laffer Curve as an argument for doing so. Is there evidence to back up this legislation?
-Also address what are the potential impacts from the corona-virus induced stock market crash and spike in unemployment.
-The Laffer curve basically relates how a 5% increase in a tax rate does not necessarily increase the taxing agency's revenue 5%, it may even decrease the total revenue due to the interaction of arithmetic (5% increase) and economic factors (a higher effective price will decrease economic activity). A simplistic explanation is that the tax increase may be 5 % of economic activity, but that tax increase reduces that economic activity due to a higher effective price of goods and services, so the 5% increase taxes a lower base revenue. And that lower base revenue is caused by the higher tax rate.
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