Effects of Tax Income on Labor Supply and Ad
I. Introduction One of the most commonly discussed issues in economics is how tax rates relate to economic growth. Advocates of tax cuts claim that a reduction in the tax rate will lead to increased economic growth and prosperity. Others claim that if we reduce taxes, almost all of the benefits will go to the rich, as those are the ones who pay the most taxes. Specially, we truly care about how tax rates can lead to the changes in labor supply and aggregate demand (AD). What does economic theory suggest about the relationship between labor supply, AD and taxation? Our limitation is only in our country- Vietnam. The Law on Personal Income Tax, approved by Vietnam National Assembly XII on 21 November 2007, officially coming into effect on 1st, January 2009, marked the great effort of the Government in perfecting its personal income regulation policy Now 2012, we want to know more about the affects of this tax to labor supply and AD in VietNam. We realize that income tax is a very hot, real and controversial issue in Vietnam. Our aims are to provide more information about the relationship between income tax and the labor supply, AD in Vietnam, to know how changes in income tax can lead to the changes in labor supply, AD. At the moment, in VietNam economic recent situation, the percentage tax on person is suitable or not and which percentage can be more suitable? Our issue is: “Effects of tax income on labor supply and AD”
II. Literature review
Taxation is one of the most concerned issues to economists as well as to everyone in the economy. Income tax now becomes more and more heated topic, which is being discussed and mentioned everywhere - from the Congress to the offices. There are also many assignments concerning about it. In general, the economists use 3 models when doing research to find out the relationship between the income tax and the economic growth.
1/ Model 1: A society without taxation
II. Literature review
Taxation is one of the most concerned issues to economists as well as to everyone in the economy. Income tax now becomes more and more heated topic, which is being discussed and mentioned everywhere - from the Congress to the offices. There are also many assignments concerning about it. In general, the economists use 3 models when doing research to find out the relationship between the income tax and the economic growth.
1/ Model 1: A society without taxation
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