Taxes on labor have the effect of encouraging
A)workers to work more hours.
B)the elderly to postpone retirement.
C)second earners within a family to take a job.
D)unscrupulous people to take part in the underground economy.

Question

Quizplus · Accepted Answer

Taxes on labor increase the cost of legal employment, leading some people to enter the underground economy, where they can earn money tax-free. This is especially true for those who work in low-wage jobs with slim profit margins. Therefore, taxes on labor encourage unscrupulous people to take part in the underground economy.

Taxes on Labor Have the Effect of Encouraging