Incentives to work and save are reduced when:
A)Pigovian taxes are implemented
B)consumption taxes replace income taxes
C)income taxes are higher
D)all of the above are true

Question

Quizplus · Accepted Answer

Higher income taxes reduce the amount of income that individuals can keep from their work, which in turn reduces the incentive to work and save. Pigovian taxes and consumption taxes may have an impact on behavior but not necessarily on the incentives to work and save.

Incentives to Work and Save Are Reduced When