Question

Which of the following is true?

High-income taxpayers would rather have a $1,000 tax deduction than a $1,000 tax credit
Low-income taxpayers would rather have a $1,000 tax deduction than a $1,000 tax credit
Both "a" and "b"
Neither "a" nor "b"

Answer 1

Neither high-income nor low-income taxpayers would prefer a $1,000 tax deduction over a $1,000 tax credit.

Step-by-step explanation:

The statement that is true is 'Neither 'a' nor 'b'. Both high-income taxpayers and low-income taxpayers would prefer a $1,000 tax credit over a $1,000 tax deduction. The reason is that a tax credit directly reduces the amount of taxes owed, while a tax deduction reduces the taxable income, resulting in a smaller reduction in taxes.