A tax on interest income:

Name: A tax on interest income:
Brand: Quizplus
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Question

Quizplus · Accepted Answer

A tax on interest income reduces the net interest rate received by savers, making the gross interest rate paid by investors greater than the net interest rate received. This may discourage saving, but the effect on saving depends on various factors such as the size of the tax, the level of interest rates, and the individual preferences of savers. A lump-sum tax, on the other hand, is a fixed tax that does not depend on any economic activity.

A Tax on Interest Income