Which of the Following Best Explains Why High Marginal Tax

Multiple Choice

Which of the following best explains why high marginal tax rates retard output?

A) High marginal tax rates reduce the incentive to earn, invest, and use resources efficiently.
B) High marginal tax rates will encourage foreign investment.
C) High marginal tax rates will reduce budget deficits and lower interest rates.
D) High marginal tax rates encourage people to substitute more-desired nondeductible goods for less-desired tax-deductible goods.