The deadweight loss of an income tax is determined by the

Question

Quizplus · Accepted Answer

The deadweight loss of an income tax is fundamentally determined by the marginal tax rate. This is because the higher the marginal tax rate, the greater the disincentive to work, invest, and take risks. As a result, individuals will be less likely to engage in these activities, which leads to a reduction in economic activity and a deadweight loss to society. The other options do not have a direct impact on deadweight loss.

The Deadweight Loss of an Income Tax Is Determined by the