Question

Does high taxation restrict economic growth? A government increases taxes to provide larger transfer payments to poorer regions of a country. Who would oppose the above policy by making the point that higher taxation restricts economic growth?

a. A neo-conservative, market-oriented economist
b. A left-leaning, socialist economist
c. A Marxist-leaning, radical economist
d. A moderate, Keynesian, liberal economist

Answer 1

High taxation can be seen as a potential constraint on economic growth, according to some economists. A neo-conservative, market-oriented economist is likely to oppose a policy of increasing taxes to provide larger transfer payments. Supply-side economists argue that high taxes can reduce the incentive to invest new money into the economy, while moderate, Keynesian, liberal economists may have a more balanced view on taxation.

Step-by-step explanation:

High taxation can be seen as a potential constraint on economic growth by some economists. A neo-conservative, market-oriented economist would likely oppose a policy of increasing taxes to provide larger transfer payments, as they believe that higher taxes can deter people from working hard and investing, thereby restricting economic growth.

Supply-side economists argue that high taxes reduce the incentive to invest new money into the economy and can lead to little growth. They advocate reducing taxes and regulations to spur economic growth.

However, it is important to consider that economists have different perspectives on taxation and its effects on economic growth. Moderate, Keynesian, liberal economists may have a more balanced view and focus on designing a tax system that achieves its goals of raising revenue and redistributing income without distorting decisions too much.