When the government taxes labour earnings,what can we expect people to do

Question

Quizplus · Accepted Answer

The law of demand suggests that if the cost of labour (taxes) increases, people will demand less of it. If people are taxed on their earnings, they have less incentive to work and may choose to work less in order to maintain a balance between work and leisure. Option A is unlikely because people will be receiving less net income than before, so they will not work more to keep the same standard of living. Option C is possible, but it ultimately depends on the availability of better-paying jobs. Option D is an extreme and unrealistic response to taxation.

When the Government Taxes Labour Earnings,what Can We Expect People