The supply of financial capital is very mobile. People can move their bank and brokerage accounts around the world and invest in foreign corporations with a click of the mouse. Therefore, taxes on financial capital:

Question

Quizplus · Accepted Answer

Since financial capital is very mobile, taxes on financial capital will not raise very much revenue from suppliers of financial capital. Therefore, choice C is the correct one. Taxes on financial capital may also lead to a reduction in investment and savings due to the increased cost of investing and saving, and result in a deadweight loss. Therefore, choice B is incorrect. Additionally, while taxes on financial capital may generate some revenue for the government, it may not be entirely profitable given the possible reduction in investments and savings. Therefore, choice A is incorrect. Finally, the statement "are a good idea" is too general and cannot be answered with a simple yes or no without further context. Therefore, choice D is incorrect.

The Supply of Financial Capital Is Very Mobile