A Withholding Tax

question 89

Multiple Choice

A withholding tax

• A)is borne by a taxpayer who did not directly generate the income that serves as the source of the passive income.
• B)a direct tax on workers.
• C)assures the local tax authority that it will receive the tax due on the passive income earned within its tax jurisdiction.
• D)both a and c

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Definitions:

Disposable Income

Post-tax funds households can use for expenditure and savings.

Induced Consumption

Consumer spending that is influenced by changes in income levels, as opposed to spending that is not influenced by such changes.

Disposable Income

The funds that are available to households for saving and spending activities after the deduction of income taxes.

Induced Consumption

The portion of consumer spending that increases with an increase in disposable income, implying that as people earn more, they tend to spend more.