Why do some policymakers support a consumption tax rather than an income tax?
A)The average tax rate would be lower under a consumption tax.
B)A consumption tax would encourage people to save earned income.
C)A consumption tax would raise more revenues than an income tax.
D)The marginal tax rate would be higher under an income tax.

Question

Quizplus · Accepted Answer

A consumption tax encourages saving because it taxes people on what they spend rather than what they earn. This means that if someone decides to save their income instead of spending it, they can defer or potentially avoid taxation, thereby incentivizing saving over immediate consumption.

Why Do Some Policymakers Support a Consumption Tax Rather Than