"Obama Considers Delaying Tax Increase" "U.S. President-elect Barack Obama is considering delaying his proposal to repeal the Bush tax cuts for the wealthiest Americans in light of the economic downturn."
Www)nytimes.com 11/23/2008
Obama's possible decision to delay the tax increase recognizes the fact that a tax increase will ________ disposable income and ________ real GDP.

Question

Quizplus · Accepted Answer

A tax increase would decrease disposable income because individuals have less money to spend after taxes. Decreasing disposable income typically leads to a decrease in consumer spending, which can negatively affect real GDP.