An income tax distorts the choice between present and future consumption.

Name: An income tax distorts the choice between present and future consumption.
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An income tax reduces the amount of disposable income available for both present and future consumption, influencing individuals to potentially alter their consumption choices between the present and the future. This is because the tax reduces the return on savings, making future consumption more expensive relative to present consumption.

An Income Tax Distorts the Choice Between Present and Future