Final answer:
The average tax rate that will result in a 13 percent increase in tax revenues can be calculated using the Laffer curve. If the tax rate lies to the right of the optimal point on the Laffer curve, a decrease in taxes will increase tax revenues.
Step-by-step explanation:
The average tax rate that will result in a 13 percent increase in tax revenues can be determined by analyzing the Laffer curve. The Laffer curve shows the relationship between tax rates and tax revenues. According to the curve, there is an optimal tax rate that maximizes government revenue. If the tax rate lies to the right of that point, a decrease in taxes will increase tax revenues.
For example, let's say the current average tax rate is 30 percent. To calculate the average tax rate that will result in a 13 percent increase in tax revenues, we can use the Laffer curve to estimate the optimal tax rate. If a decrease in taxes by 10 percent leads to a 13 percent increase in tax revenues, then the new tax rate would be:
New tax rate = Current tax rate - (10 percent x (13 percent / 10 percent))
New tax rate = Current tax rate - 13 percent
So, the average tax rate that will result in a 13 percent increase in tax revenues is the current tax rate minus 13 percent.