Which of the Following Statements Best Represents the Opinion of Many

question 137

Multiple Choice

Which of the following statements best represents the opinion of many economists regarding the impact that changes in tax laws have had on recent changes in income inequality in the United States?

• A)Reductions in income tax rates have favored high-income individuals more than low-income individuals. As a result, reductions in federal income tax rates have led to more income inequality.
• B)Reductions in income tax rates have created greater incentives for low-income individuals to work, save, and invest. As a result, reductions in federal income tax rates have led to less income inequality.
• C)Reductions in income tax rates probably have had little impact on the distribution of income.
• D)Reductions in income tax rates have been offset by increases in corporate income tax rates and payroll taxes. As a result, greater income inequality in the 1990s has been followed by a more equal distribution of income since 2001.

---

Definitions:

Capital Balances

Represent the amount of funds contributed by owners plus retained earnings in a company's equity.

Net Income

The total profit of a company after all expenses and taxes have been deducted from revenue.

Salary

Regular payments made by an employer to an employee, typically on a monthly or biweekly basis, in exchange for professional services rendered.