A Tax on Interest Earned from Saving Is an Example

Multiple Choice

A tax on interest earned from saving is an example of a tax with a high deadweight loss because

A) it compels retired individuals to rely more heavily on Social Security.
B) it encourages people to consume less and save more for their future expenditures.
C) doing so amounts to double taxation since savings often come from income that has already been taxed once.
D) the savings that are taxed could have been spent on capital goods which will benefit society.