Which of the following is not an argument in favor of reforming the tax laws to encourage saving?
a. Saving is a key determinant of long-run prosperity.
b. Current tax laws discourage saving for the purpose of leaving a large bequest.
c. The substitution effect of a higher return to saving may be about equal to the income effect of a higher return to saving.
d. The tax code currently taxes some forms of capital income twice.
Answer: c. The substitution effect of a higher return to saving may be about equal to the income effect of a higher return to saving.
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