Which policy involves lowering business or payroll taxes to encourage hiring?

• A. Taxation reform
• B. Welfare reform
• C. Supply-side economics
• D. Progressive taxation

Answer: (A)

Lowering business or payroll taxes to encourage hiring reflects supply-side economics. This approach argues that reducing the costs of production, including the cost of labor for employers, makes it cheaper for firms to hire, invest, and expand. When payroll taxes or corporate taxes are reduced, employers face lower expenses and are more likely to add jobs and raise production, which can stimulate overall employment and economic growth. In contrast, taxation reform is a broad term that can cover many changes, welfare reform focuses on social safety nets, and progressive taxation describes a tax structure where rates rise with income rather than specifically incentivizing hiring through tax cuts.