Low marginal tax rates discourage work effort but make fewer people eligible for welfare.

Question

Quizplus · Accepted Answer

Low marginal tax rates actually encourage work effort because individuals get to keep more of each additional dollar they earn, making work more financially rewarding. However, they do not directly affect eligibility for welfare, which is typically based on income levels, assets, or specific circumstances rather than tax rates.

Low Marginal Tax Rates Discourage Work Effort but Make Fewer