cons of Taxation: 1. Discourages Economic Activity: Because they lower people's disposable income, high taxes have the potential to hinder economic activity. This may result in lower consumption, which would impact revenue for firms. 2. limits Economic Growth: Steep taxation may stifle economic expansion. In order to retain profitability, businesses may hire fewer employees or even fire current ones when consumption declines. Slow economic growth and unemployment may result from this