EBK ECONOMICS: PRINCIPLES AND POLICY
EBK ECONOMICS: PRINCIPLES AND POLICY
13th Edition
ISBN: 9780100605930
Author: Blinder
Publisher: YUZU
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Chapter 17, Problem 1DQ
To determine

Comment the statement regarding federal government tax.

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Explanation of Solution

The tax as a percentage of GDP is shown in the figure below:

EBK ECONOMICS: PRINCIPLES AND POLICY, Chapter 17, Problem 1DQ

The federal government tax increases according to the proportion of national income of the country. According to figure 1, the ratio of taxes to the percentage of GDP was constant for around 50 years. While comparing with the industrialized countries, the taxation level in the country is low. Thus, there is no evidence to prove that the existing tax rates will ruin the economy.

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