Final answer:
Critics of supply-side economics argue that wage-income tax cuts result in some people working more and others working less, reflecting the varying preferences for income versus leisure among workers.
Step-by-step explanation:
Critics of supply-side economics often point to evidence suggesting that decreases in wage-income tax rates result in A. Some people working more but others working less. The idea is that while some individuals, particularly part-time workers, may respond to a tax cut by working additional hours, others, especially those with higher incomes, might choose to work fewer hours to maintain their desired level of disposable income. This variance in behavior reflects the complexity of labor supply decisions and the mixed incentives posed by income tax policy adjustments.
The primary argument of supply-side economics is that lower income taxes increase the incentive to work, as people can earn more per hour after taxes. Theoretically, if people keep more of their wages, they will supply more labor, which in turn could increase the real GDP. However, this concept is based on the assumption that workers will prioritize income over leisure, which is not always the case.
A key concept to understand in this context is the backward-bending supply curve for labor. This occurs when higher wages or lower taxes actually lead to some people, especially high-income earners, choosing to work fewer hours. They might do so because they've reached a level of income that allows them to value leisure time more, or because they wish to enjoy the fruits of their labor. This effect, while not always seen in the short run, is a common trend over the long term, where higher wages over the last century have led Americans to work fewer hours per week on average.