A tax on interest income could be efficient even if it leads to a decrease in savings.

Question

Quizplus · Accepted Answer

Even if a tax on interest income leads to a decrease in savings, it could still be efficient if it generates enough revenue to fund important government programs or if it helps to redistribute wealth and promote economic equality. The efficiency of a tax depends on a variety of factors beyond just its effect on savings behavior.

A Tax on Interest Income Could Be Efficient Even If