When the government implements programs such as progressive income tax rates, which of the following is likely to occur?
A)Equity is increased and efficiency is increased.
B)Equity is increased and efficiency is decreased.
C)Equity is decreased and efficiency is increased.
D)Equity is decreased and efficiency is decreased.

Question

Quizplus · Accepted Answer

Progressive income tax rates aim to increase equity by placing a higher tax burden on those with higher incomes. However, this can decrease efficiency due to the disincentive effect it has on high earners to work harder or invest in their businesses. This can lead to a decrease in economic growth and productivity. Therefore, while equity is increased, efficiency is likely decreased as well.

When the Government Implements Programs Such as Progressive Income Tax