O-LevelEconomicsGovernment and the macroeconomy2281/11 · Oct/Nov 2010 · Q251 Mark
Brazil is a highly taxed economy. Some Brazilian economists have suggested that if the government were to cut tax rates, the government would actually receive more tax revenue. Why may cutting taxes increase revenue?
AIt may encourage emigration.
BIt may increase the tax burden.
CIt may lead to a fall in investment.
DIt may reduce tax evasion.
✓ Correct answer
D: It may reduce tax evasion.
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