Question

What effect would a tax increase have in income

Answer 1

Tax rate cuts may encourage individuals to work, save, and invest, but if the tax cuts are not financed by immediate spending cuts, they will likely also result in an increased federal budget deficit, which in the long-term will reduce national saving and raise interest rates.

Answer 2

Answer:

A tax increase will decrease the disposable income people have.

Explanation:

If the government increases taxes, this will affect the disposable income people have which is the income after the taxes are deducted. With the same salary, the disposable income will decrease which will affect their ability to buy goods which lower their consumption.