If taxation becomes more progressive, the built-in stability in the economy will decrease.

Question

Quizplus · Accepted Answer

This statement is not necessarily true. The relationship between progressive taxation and economic stability is complex, and depends on various factors such as the specific tax policies and their effects on consumption, saving, investment, and fiscal policy. In some cases, progressive taxation may help reduce income inequality, promote social welfare, and enhance long-term growth and stability by financing public goods and services, reducing debt and deficits, and mitigating economic cycles.

If Taxation Becomes More Progressive, the Built-In Stability in the Economy