A substantial increase in marginal tax rates in an economy is most likely to encourage individuals:

Question

Quizplus · Accepted Answer

A substantial increase in marginal tax rates creates a higher tax burden on individuals, making it more likely for them to search for tax shelters and ways to reduce their tax liability. This can include spending resources on tax advisors, investing in tax-exempt assets, or finding other tax-saving strategies. It is unlikely to increase work incentives or investment as individuals may feel discouraged by the higher tax burden. It may also not necessarily lead to increased reliance on transfer payments or Social Security contributions.

A Substantial Increase in Marginal Tax Rates in an Economy