Actions by the federal government that decrease the progressivity of the tax system
A) decrease the amount of government spending.
B) increase the effect of automatic stabilizers.
C) decrease the effect of automatic stabilizers.
D) increase the multiplier effect.

Question

Quizplus · Accepted Answer

Actions by the federal government that decrease the progressivity of the tax system include reducing or eliminating tax credits, deductions, and exemptions for low-income households, as well as lowering tax rates for high-income households. These actions decrease the overall progressivity of the tax system and make it less fair for low-income households. Decreasing the amount of government spending (A) would not necessarily have a direct impact on the progressivity of the tax system. Increasing the effect of automatic stabilizers (B) would generally have the effect of making the tax system more progressive, as automatic stabilizers like unemployment insurance and food stamps disproportionately benefit low-income households. Increasing the multiplier effect (D) would not necessarily have a direct impact on the progressivity of the tax system.

Actions by the Federal Government That Decrease the Progressivity of the Tax