Economic growth over the past decade in the country Tarragon has been very low. As a? result, the unemployment level has remained high. While discussing possible measures to improve the? situation, Jane? Watson, an associate at a leading research? institute, says that the government should lower personal income tax rates.? This, she? believes, will induce people to work? more, which in turn will raise output. Martina? Allen, an editor of a reputed? newspaper, disagrees. According to? her, the income tax rates in Tarragon are not very high and are in fact similar to comparable countries. In her? opinion, the government should lower the corporate tax rates to encourage investment by firms.
Which of the? following, if? true, will weaken the claim that it would be more effective to lower corporate taxes to increase aggregate supply than to reduce personal income tax? rates?
A. Personal income tax rates have not been changed in the last five years.
B. The? government's budget deficit is currently three percent of? Tarragon's GDP
C. Some of the largest firms in the country reported a fall in profits last year.
D. The domestic? firms' unplanned inventories have increased by more than 25 percent this year.
E. Corporate taxes generated more revenue for the government of Tarragon last year than personal income taxes.