What effect would a tax increase have on income? It would reduce gross income. It would not affect net income. It would increase net income. It would not affect gross income.

Question

Tessa Gordon

Mathematics

19 February, 00:43

What effect would a tax increase have on income? It would reduce gross income. It would not affect net income. It would increase net income. It would not affect gross income.

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Ronald Hatfield · Answer 1

It would not affect gross income.

Step-by-step explanation:

An increase on the tax levied on individuals of a given country will not affect the gross income of the employees. Gross income refers to the crude earnings remunerated to employees for their services rendered to an institution or organization. A tax increase will therefore not impact the gross income since it has no effect on the services rendered by individuals.

In reality, a tax increase will affect the net income by lowering it. This is because net income is income after tax and other deductions have been made on the gross income earned. An increase in tax as a deduction will consequently reduce the net income