Question

Describe how inflation interact with the tax system to distort savings and how it affects investment....

Describe how inflation interact with the tax system to distort savings and how it affects investment. Is this problem more worst now or twenty years ago?

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Answer #1

Consider the income is same before and now and the inflation is increasing and this actually means that the tax would be same but since the inflation is increasing with the income after tax being same, it can be mentioned that the living standard of the person gets to reduce and this means the situation today is worse than before.

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