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A Local Government Currently Has a Tax Base of $10

Question 13

Multiple Choice

A local government currently has a tax base of $10 million and a tax rate of 10 percent. If the tax rate is increased to 12 percent, the tax base becomes $8.5 million. If the goal is to maximize tax revenues the tax rate should be


A) raised above 12 percent.
B) kept at 10 percent.
C) raised to 12 percent.
D) abolished.

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