- Suppose That Country Z Enacts New Income Tax Legislation That Decreases Income Taxation At Higher Income Levels I E Th 1 (373.78 KiB) Viewed 69 times
Suppose that Country Z enacts new income tax legislation that decreases income taxation at higher income levels (i.e. the legislation reduces the marginal tax rate for the highest (above average) income brackets from 45% to 37% (the legislation leaves other tax rates unchanged)). Generalise the Roy model and build on your graph from part (b) and show how the change in the income tax legislation described influences the incentive to migrate to Z. (5 marks) Describe which types of workers (the highly skilled or the less skilled) are most likely to be attracted by the income tax policy change and why. Explain briefly and refer to your graph in part (c) to support your answer. A morka