Mr. Lathrop refuses to pay income taxes because his conscience will not allow him to support a government that spends billions of dollars on military weapons. Mr. Lathrop's reasoning best illustrates Kohlberg's level.

Mr. Lathrop is in the sixth and final level of the Kohlberg's theory of moral deveolopment. This stage is known as the individual principles of conscience stage.

In this stage, actions are carried out under the guidance of individual ethical and moral principles, regardless of social conventions and laws.

And this can be seen in this case: Mr. Lathrop refuses to pay income taxes, because he does not want to fund military weapons, even if he is compelled by law to do so, and could end up in jail for his refusal. He prefers to be coherent with his views.

answer; (b) insider trading;