When interest income from savings is taxed,
A) people will save more to make up for what is lost in taxes.
B) people will save the same amount as they would have without the tax.
C) people will save less than they would without the tax.
D) None of the above is correct since the government would not tax interest on savings.

Question

Quizplus · Accepted Answer

When interest income from savings is taxed, people will save less than they would have without the tax. This is because the tax reduces the amount of money that people earn on their savings, making it less attractive to save.

When Interest Income from Savings Is Taxed