Sasha is a well-educated entrepreneur who operated a small business in her home country of Evensplitia. At the encouragement of American relatives, Sasha recently immigrated to the United States and applied for citizenship. "In Evensplitia, tax rates were very high," Sasha complained. "The government used my taxes to finance all sorts of social programs to help the less fortunate. While I want to help, it has really undermined the profit incentive of individuals such as me. I feel those high taxes have stunted economic growth." Sasha's comments illustrate the reason many socialist countries are experiencing a(n)
A) antitrust problem.
B) depression.
C) brain drain.
D) budget surplus.

Question

Quizplus · Accepted Answer

Socialist economies tend to be characterized by high marginal tax rates on bright and talented individuals such as doctors, engineers, lawyers, business owners, and gifted artists and performers. This has encouraged many of these individuals to immigrate to other countries, such as the United States, which have lower marginal tax rates. This problem is called the brain drain.

Sasha Is a Well-Educated Entrepreneur Who Operated a Small Business