Read the following passage carefully and answer the questions based on the passage:
People will invest in education if they are given the economic freedom to fully enjoy the benefits. As has become the norm, people invest in education because the marginal return on education increases their economic freedom. It is a sound decision to invest in education if, after tax rate reductions, people can enjoy a certain income marginally higher than the income they derive from improving educational levels. However, it makes no significant sense to invest in education if the government taxes the income of educated people at a very high rate. The same applies to parents who wish to improve their children's educational standards.
Why does the passage claim that high taxation reduces educational investment?
Show answer & explanation
Correct answer: C
Explanation
The passage states that "It is a sound decision to invest in education if, after tax rate reductions, people can enjoy a certain income marginally higher than the income they derive from improving educational levels. However, it makes no significant sense to invest in education if the government taxes the income of educated people at a very high rate." This indicates that high taxes make the increased income from education less significant, thereby reducing the incentive or "economic rewards" of pursuing education.