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# Evaluate the macroeconomic effects of an increase in income tax rates on a country or countries of your choice
- URL: https://www.a-level-economics-tutor.com/evaluate-the-macroeconomic-effects-of-an-increase-in-income-tax-rates/
- Published: 2026-10-24T17:35:28.000Z
- Updated: 2026-10-24T17:35:28.000Z
- Author: Jaisul Naik
- Tags: Edexcel 25 Mark Question

### Edexcel A-Level Economics 25 Mark Question

In April 2024 the Scottish government increased rates of income tax. Income earnt over £75,000 will be taxed at 45% instead of 42%, whilst income earnt over £125,140 will be taxed at 48%, an increase from 47%. The Estonian government has announced plans to increase the country's income tax rate for all citizens from 20% to 22% in 2025. **Evaluate the macroeconomic effects of an increase in income tax rates on a country or countries of your choice.** (June 2026)

**Plan**

- **Country: UK**
- **Paragraph 1**
  - **Argument: one macroeconomic effect of higher income tax rates is an increase in unemployment**
  - **Diagram: decrease in aggregate demand**
  - **Evaluation: however, the overall effect depends on the original state of the economy and the size of the multiplier**
- **Paragraph 2**
  - **Argument: another macroeconomic effect of higher income tax rates is a decrease in potential growth**
  - **Diagram: decrease in long-run aggregate supply**
  - **Evaluation: however, higher tax rates can generate greater tax revenue (up to an extent), which can allow for greater investment in the future**

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