Economist Dr. James Wong argues that wealth taxes are more economically efficient than income taxes because they tax accumulated resources rather than productive activity.
2
readingWhich economic analysis would best support Wong's efficiency argument?
A
Wealth inequality has increased
B
Economic models show wealth taxes reduce deadweight loss by 30% compared to equivalent income taxes, as they don't penalize work or investment decisions—only accumulated holdings
C
Some countries tax wealth
D
Tax policy is debated
Correct Answer: B
Choice B is the best answer. Lower deadweight loss + preserved incentives proves efficiency advantage.
đź’ˇ Strategy: Economic efficiency claims need deadweight loss comparisons.