It has been claimed that if income tax rates levied on individuals rise from zero up to 100%, tax revenue first rises, but at some stage it will fall. If this claim is valid, then it follows that
- Agovernments should forgo any attempt to relieve poverty via fiscal policy.
- Bincome tax rates should be set to maximise government tax revenue.
- Ctaxes should be levied on expenditure rather than income.
- Dthere are limits to the redistributive effects of progressive taxation.