Which of the following statements with respect to Canadian tax policy is NOT correct?
A)The economic burden of a particular tax may not fall on the same group that has the legal liability to pay the tax.
B)Extremely high rates of tax will always encourage individuals to work harder so that they will have more after tax income.
C)The inability to harmonize the GST in some provinces has increased the complexity of tax compliance.
D)A progressive tax system is unfair to individuals with incomes that fluctuate significantly from year to year.

Question

Quizplus · Accepted Answer

Extremely high rates of tax do not always encourage individuals to work harder. In fact, there is a point at which increasing tax rates can create disincentives for individuals to work and earn income, leading to a reduction in overall economic activity. This is known as the Laffer curve.

Which of the Following Statements with Respect to Canadian Tax