1. When the tax rates are low, people do not tend to evade taxes.

  2. When the taxes are high, people do not buy anything.

  3. High tax rates cause disappointment among the tax payers.

  4. People are happier with low tax rates.

  5. Countries with high tax rates cannot keep a strict check on its citizens.

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1 Answers

Option 1 : When the tax rates are low, people do not tend to evade taxes.

The above statement says that lower tax rates generate higher returns. Option 2 cannot be right as it does not give a logical reason for its claim. Both option 3 and 4 also cannot be right since they state how tax payers feel about the particular tax rates without giving any reason for the problem above. Option 5 makes an assumption without any basis, so it cannot support the above statement. Whereas option 1 gives a logical reason as to why lower rates get better returns for people do not evade taxes when the tax rates are low. Hence, option 1 is the right answer.
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