Replacing the personal income tax with a consumption tax would:

Question

Quizplus · Accepted Answer

Replacing the personal income tax with a consumption tax would favor wealthy and high income individuals because they tend to save more of their income and consume a smaller proportion of it compared to low income individuals. This means that they would have to pay less in consumption taxes compared to their income taxes, while low income individuals, who tend to spend a larger proportion of their income, would be hit harder by the consumption tax. Additionally, a consumption tax could potentially decrease overall federal revenues from taxation if it discourages consumption and slows down economic growth.

Replacing the Personal Income Tax with a Consumption Tax Would