ECON 133 Study Guide - Quiz Guide: Playstation 3, Corporate Tax, Human Capital
Document Summary
Econ 133 summer 2018 ps3: read the paper: tax structure and economic growth and answer the following, summarize five ways in which taxes can affect growth. Lee and gordon were able to pinpoint ways in which changes in tax policies have the capacity to affect growth. Taxes can generate growth both over time and indirectly. Low tax rates can lead to new investment leading to short run growth. The effect on human capital can be difficult since education can be either be encouraged or discouraged by taxes. Progressive labor income taxes can discourage growth while the taxes on returns and taxes used for public funds can help subsidize/promote education. Taxes can affect the fostering of new ideas and eventually increasing productivity. Corporate taxes are linked to risk taking and taxes affect risk taking since profit and loss are taxed differently. Risk taking is necessary for new investment which encourages growth.
