The additional taxes needed to pay the interest on the public debt reduce incentives to work, save, invest, and bear risks.

Question

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When additional taxes are introduced to pay the interest on public debt, it can lead to a decrease in incentives to work, save, invest, and take risks. This is because individuals and businesses have less disposable income due to the higher taxes, which can make it less appealing to engage in these activities. Additionally, high taxes can discourage individuals and businesses from investing and bearing risks, as the potential returns may not be worth the added tax burden.

The Additional Taxes Needed to Pay the Interest on the Public