What effect would a tax increase have on income?

A. It would reduce gross income.
B. It would not affect net income.
C. It would increase net income.
D. It would not affect gross income.



Answer :

Final answer:

An increase in income tax reduces gross income but does not affect net income.


Explanation:

An increase in income tax leads to a reduction in gross income for individuals, as a higher portion of their earnings is taxed by the government.

However, the increase in income tax does not directly impact net income, which is the amount left after deducting taxes from gross income.

Overall, while a tax increase reduces gross income, it does not affect net income.


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Answer: A. It would reduce gross income

Explanation:

Gross income is the income that is made without the standard deductions like taxes being taken out. The higher the taxes are, the more of a decrease in gross income there would be.