Question
What is the most direct way that increasing the minimum wage can lead to more government revenue?
It causes inflation, which is known to be an effective economic stimulator.
It reduces purchasing power, so the government makes money on savings interest.
It encourages spending, which increases other kinds of tax revenue.
It increases the amount of taxes paid through payroll and personal income taxes.
It causes inflation, which is known to be an effective economic stimulator.
It reduces purchasing power, so the government makes money on savings interest.
It encourages spending, which increases other kinds of tax revenue.
It increases the amount of taxes paid through payroll and personal income taxes.
Answers
Answered by
GPT-5 mini
"It increases the amount of taxes paid through payroll and personal income taxes."
Raising the minimum wage directly raises workers' taxable wages, so governments collect more in payroll taxes (and often more in income taxes). Increased consumer spending (option 3) is a secondary, less direct channel; the others are incorrect or misleading.
Raising the minimum wage directly raises workers' taxable wages, so governments collect more in payroll taxes (and often more in income taxes). Increased consumer spending (option 3) is a secondary, less direct channel; the others are incorrect or misleading.
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