Question

Compared to taxes on labor income, taxes on capital income generate ________ deadweight loss and are paid by people who generally have the ________ ability to pay.

Answer 1

Compared to taxes on labor income, taxes on capital income generate a larger dead-weight loss and are paid by people who generally have the most ability to pay .

Explanation:

Compared to labour income taxes, capital income taxes generate larger deadweight losses and are paid by the people who usually have the most ability to pay.

Taxes are involuntary charges imposed on individuals or companies for the financing of Government operations by a government entity, regional, national level.

Property owners of assets gain their property capital income. Land, machinery, buildings, and copyrights are included in assets. Labor costs and aspects of self-employed earnings include work income.

For example, interest costs on bonds, dividend income, lease from land and royalty are examples of capital income. Capital income, in addition to money earned from the work, is anything they make from cash that they saved or assets they own.