What do economists studying the policy of taxation of interest and other capital income find
A)Theory and evidence support the reduction of taxation.
B)Theory and evidence refute the reduction of taxation.
C)There is no consensus in theory or research.
D)The income and substitution effects dominate.

Question

Quizplus · Accepted Answer

Economists studying the policy of taxation of interest and other capital income do not have a consensus in theory or research. Some argue that lower taxes would stimulate more saving and investment, while others argue that it would worsen income distribution and increase the deficit. Additionally, the effects of taxation on capital income may interact with other parts of the tax code, such as the taxation of labor income or the treatment of capital gains. Therefore, the optimal taxation of capital income is highly debated and dependent on specific circumstances.

What Do Economists Studying the Policy of Taxation of Interest