What is the tax wedge, and how does it affect income?

• A. The tax wedge is the difference between pretax and post-tax income, reducing disposable income for individuals and profits for corporations.
• B. The tax wedge is the difference between corporate profits and individual income, having no impact on disposable income.
• C. The tax wedge is the difference between pretax and post-tax income, increasing disposable income for individuals.
• D. The tax wedge is the difference between government spending and revenue, increasing disposable income for individuals.

Answer: (A)