Which of the Following Is Not an Argument in Favor

question 302

Multiple Choice

Which of the following is not an argument in favor of reforming the tax laws to encourage saving?

• A)Saving is a key determinant of long-run prosperity.
• B)Current tax laws discourage saving for the purpose of leaving a large bequest.
• C)The substitution effect of a higher return to saving may be about equal to the income effect of a higher return to saving.
• D)The tax code currently taxes some forms of capital income twice.

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Definitions:

Sustainable Growth

The peak growth rate a business can achieve for its revenue, profits, and dividends without escalating its debt or raising more equity capital.

Profit Margin

An indicator of a company's financial health, calculated as net income divided by revenue, and expressed as a percentage.

Sales Increase

The rise in the volume or value of sales of goods and services over a specific period.

Fixed Assets

Long-term tangible assets that are used in the operations of a business and are not expected to be converted into cash in the near term.