A reduction in the tax rate on income from saving would do which of the following?
A)It would most directly benefit the poor in the short run.
B)It would increase real wages over time.
C)It would decrease the capital stock over time.
D)It would decrease productivity over time.

Question

Quizplus · Accepted Answer

A reduction in the tax rate on income from saving would incentivize individuals to save more, leading to an increase in investment and capital accumulation. This, in turn, would increase productivity and ultimately real wages over time. It would not directly benefit the poor in the short run, as they may not have the resources to save, and it would not decrease the capital stock or productivity over time.

A Reduction in the Tax Rate on Income from Saving