The more progressive the tax system, the:
A) Less is the built-in stability for the economy
B) Greater is the built-in stability for the economy
C) Less is the effect of crowding-out on the economy
D) Greater is the severity of business fluctuations on the economy

Question

Quizplus · Accepted Answer

A more progressive tax system means that higher-income taxpayers are taxed at a higher rate. This results in a redistribution of income from the rich to the poor. This, in turn, leads to greater income equality and less income inequality. Greater income equality leads to a more stable economy as the poor tend to spend a larger share of their income than the rich. More spending leads to more economic activity, which leads to more stability.

The More Progressive the Tax System, The