Part of the deadweight loss from taxing labor earnings is that people
A)will work more.
B)will be reluctant to hire accountants to file their tax returns.
C)with low tax liabilities will universally be worse off than under some other tax policy.
D)will work less.

Question

Quizplus · Accepted Answer

When labor earnings are taxed, individuals may respond by working less, either by reducing their hours of work or by not working at all. This decrease in labor supply creates a deadweight loss, which is the loss of economic welfare that results from the distortion of incentives caused by the tax. Therefore, option D is the best choice.

Part of the Deadweight Loss from Taxing Labor Earnings Is