A shift away from taxing asset income and toward taxing consumption would lead to a:

Question

Quizplus · Accepted Answer

Taxing asset income reduces the incentive for people to save and invest, which decreases the supply of loanable funds available for investment spending. Taxing consumption, on the other hand, would increase the supply of loanable funds, as people would be incentivized to save and invest more of their income. This increase in the supply of loanable funds would lead to a lower interest rate and more investment spending.

A Shift Away from Taxing Asset Income and Toward Taxing