PrepTest 72, Section 3, Question 16
Economist: Currently, many countries rely primarily on taxing income to fund government expenditures. But taxing income does nothing to promote savings and investment. Taxing consumption, on the other hand, would encourage savings. The most important challenge facing these countries is improving their economies, and the only way to accomplish this is to increase their savings rates. Hence, _______.
Economist: Currently, many countries rely primarily on taxing income to fund government expenditures. But taxing income does nothing to promote savings and investment. Taxing consumption, on the other hand, would encourage savings. The most important challenge facing these countries is improving their economies, and the only way to accomplish this is to increase their savings rates. Hence, _______.
Economist: Currently, many countries rely primarily on taxing income to fund government expenditures. But taxing income does nothing to promote savings and investment. Taxing consumption, on the other hand, would encourage savings. The most important challenge facing these countries is improving their economies, and the only way to accomplish this is to increase their savings rates. Hence, _______.
Economist: Currently, many countries rely primarily on taxing income to fund government expenditures. But taxing income does nothing to promote savings and investment. Taxing consumption, on the other hand, would encourage savings. The most important challenge facing these countries is improving their economies, and the only way to accomplish this is to increase their savings rates. Hence, _______.
Which one of the following most logically completes the economist's argument?
most governments should stop taxing savings and investment
the economies of countries will rapidly improve if their governments adopt tax policies that encourage savings and investment
in most countries taxes on consumption alone could raise adequate revenues to fund government expenditures
the tax laws of many countries should be revised to focus on taxing consumption rather than income
it is detrimental to the economic improvement of any country to continue to tax income
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