Question

Suppose that society wants a tax system that is more progressive. For economists, which of the following items can be viewed as a potential cost (or trade off) of making the tax code more progressive? (Check all that apply)

A. simplicity in the tax code

B. amount people save

C. incentives to work

D. economic growth

E. vertical equity

F. horizontal equity

G. less tax avoidance and tax evasion

Answer 1

If the tax system is to be more progressive , many tax slabs have to be introduced and it becomes kinda complicated

As tax becomes more progressive , amount people save decreases as major proportion of their income will be paid as tax

Incentives to work are lost as , people wont be willing to work as , higher pay leads to higher tax

there can be decrease in economic growth as investment decreases.

There will be vertical equity and there is no change in horizontal equity

Tax evasion and avoidance increases as taxes rise.

So , the answers would be a,b,c,d,g.

I hope that this helps.If you have any query or controversy regarding this , put it in the comments.I will modify/edit my answer accordingly.

Have a nice day :)