Some Have Argued in Favor of Reducing Taxes on Repatriated

question 10

Essay

Some have argued in favor of reducing taxes on repatriated earnings that companies operating in the United States have made in other countries.Such a tax break could lead to a sharp increase in the amount of repatriated earnings and raise tax revenues.If such an increase were temporary,what would be the effect on the real budget deficit for the current year? What would be the effect on the structural deficit? Explain.

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Definitions:

Demand-Pull Inflation

An economic condition where prices rise because the demand for goods exceeds supply.

Cost-Push Inflation

Inflation caused by an increase in the cost of production, such as higher raw material costs, which is passed on to consumers in the form of higher prices.

Creditors

Creditors are individuals, businesses, or institutions that lend money or extend credit to others, expecting repayment in the future.

Debtors

Individuals or entities that owe money to someone else, usually as a result of borrowing funds.