Which of the following is not an argument against reforming the tax laws to encourage saving?

Question

Quizplus · Accepted Answer

Option A, B, and D all can be seen as arguments against reforming the tax laws to encourage saving. A public budget surplus would imply that the government is already saving, so there is no need to encourage private saving. The substitution effect and income effect refer to changes in the demand for saving due to changes in the return to saving, and they suggest that the overall impact on saving may not be significant. Tax cuts might lead to a budget deficit, which would have negative consequences for investment and the economy as a whole. Option C, however, is not an argument against reforming the tax laws to encourage saving. It suggests that low-income households have a higher marginal propensity to save, which means that tax reforms that incentivize saving could be particularly beneficial for them.

Which of the Following Is Not an Argument Against Reforming