1. Senator Crawford, arguing in favor of capital gains tax cuts, says that reducing capital gains tax rates will stimulate entrepreneurial activity. Senator Long, arguing against these tax cuts, suggests that they will encourage people to engage in riskier behavior and inefficient investment. Evaluate both senators' arguments.
2. Estoluania is considering replacing its progressive tax system with a flat tax that would raise equal revenue. How could this change encourage risk-taking behavior? How could it discourage risk-taking behavior?