Read the news clip, then answer the following question Paul Ryan\'s Roadmap Busi
ID: 1123804 • Letter: R
Question
Read the news clip, then answer the following question 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 Paul Ryan thinks the U.S. economy is_the Laffer curve because A. B. ° C. O D. at the maximum ot, the United States cannot benefit from either increasing or decreasing the tax rate to the right of the maximum of; the economy will expand with tax cuts and tax revenue will increase to the right of the maximum of; the economy will contract with tax cuts and tax revenue will decrease not operating on; at points on the Laffer curve the government budget is either balanced or in surplus 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/Explanation / Answer
B is the correct option
Reason
Most of the time, the economic expansionary effects of tax cuts will not offset their revenue reducing effects when it comes to the Federal Budget. Maybe in highly taxed countries like France would tax cuts be revenue neutral. On the other hand, in the United States, one of the lowest taxed developed nations, tax cuts will lead to deficits unless offset by spending reductions.
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