Question

With a large interest payment to service public debt, higher taxes may be required. What may be the result of higher taxes?

- Reduced incentive to take risk, innovate, invest, and work
- Increased incentive to take risk, innovate, invest, and work
- Reduced incentive to pay down the debt
- Increased incentive to hire additional employees

Answer 1

Higher taxes may result in a reduced incentive to take risks, innovate, invest, and work.

Step-by-step explanation:

The result of higher taxes may be a reduced incentive to take risks, innovate, invest, and work. When taxes increase, individuals and businesses have less discretionary income to spend, save, or invest. This can discourage entrepreneurship, innovation, and investment, as individuals and businesses may see less potential return on their efforts.