1 answer

One argument advanced in favor of not increasing the income tax on markets is that increasing...

Question:

One argument advanced in favor of not increasing the income tax on markets is that increasing income tax increases wealth whi

One argument advanced in favor of not increasing the income tax on markets is that increasing income tax increases wealth which contributes to increases in GDP. increasing the income tax on markets will reduce economic efficiency. increasing the income tax affects mostly middle-income and low-income individuals who are already paying heavy income taxes. not increasing income taxes will discourage corporations from increasing investment.

Answers

Increasing income tax causes a dead weight loss. Moreover according to Laffer curve, an unreasonable increase in taxes actually reduces the revenue causing inefficiency. Therefore the correct option is b - increasing income tax on market will reduce economic efficiency.

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