What is the tax wedge? What is the effect of a decrease in the income tax rate on the real wage rate paid by employers and the real wage rate received by workers? Question content area bottom Part 1 The tax wedge is the gap between the before-tax and after-tax _______. A. equilibrium quantity of labor B. potential GDP C. real GDP D. wage rates Part 2 A decrease in the income tax rate _______ the real wage rate paid by employers and _______ the real wage rate received by workers. A. raises; raises B. lowers; lowers C. lowers; raises D. raises; lowers