When interest income from savings is taxed, people will save
A)more to make up for what is lost in taxes.
B)the same amount as they would have without the tax.
C)less than they would without the tax.
D)None of the above is correct since the government would not tax interest on savings.

Question

Quizplus · Accepted Answer

Taxing interest income from savings reduces the amount of income earned from savings, making it less attractive for people to save. Therefore, people are likely to save less than they would without the tax.

When Interest Income from Savings Is Taxed, People Will Save