Which of the following tax changes would a supply-side economist be most likely to favor?

Question

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Supply-side economists believe that lower tax rates on businesses and individuals can encourage economic growth and investment. Lowering marginal income tax rates can create an incentive for individuals to work and invest more, which can lead to an increase in supply and economic activity. Eliminating an investment tax credit would decrease the incentive for businesses to invest, and an increase in capital gain tax would decrease the incentive for individuals to invest in assets like stocks and real estate. An increase in the personal income tax rate for high-income individuals would decrease their incentive to work and invest, which could decrease economic activity.

Which of the Following Tax Changes Would a Supply-Side Economist