Assess the view that a rise in Ireland's corporation tax rate is likely to have a damaging effect on its macroeconomic performance

AQA A-Level Economics Paper 2 June 2023 Insert

Assess the view that a rise in Ireland's corporation tax rate is likely to have a damaging effect on its macroeconomic performance. (25 marks)

• Paragraph 1
  • Argument: on the one hand, higher corporation tax rates are damaging as they can reduce long-term economic growth
  • Diagram: LRAS shifting left
  • Evaluation: depends on the time lag + size of the tax
• Paragraph 2
  • Argument: on the other hand, higher corporation tax rates are not damaging as higher tax revenue can enable more spending
  • Diagram: AD shifting right, multiplier effect
  • Evaluation: less business confidence and less investment

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