Question

Scenario: Over the last several years there has been a decrease in the number of new homes purchased within Country DF. One reason for this is that taxes are high, so citizens have less money to invest in such large purchases. The federal government has determined that actions need to be taken to encourage citizens to purchase homes and boost economic growth. What action can the government of Country DF take to encourage citizens to purchase homes?
a. maintain corporate tax rates
b. raise income taxes
c. raise property tax rates
d. lower income taxes for homeowners

Answer 1

Government of Country DF have to encourage citizens to purchase homes by lowering the income taxes for homeowners.

Answer: Option D

Explanation:

Income tax is a type of direct tax which the people who are earning have to pay from their income to the government of the country in which they are living. Because of the income tax been imposed, the disposable income of the people reduces.

In the country DF, because of the high taxes being imposed by the government, their disposable income is less and the cannot invest much but if the government lessens the income tax, their disposable income will increase and they will be able to buy houses.