What would changing the basis of taxation from income earned to amount spent do
A)It would necessarily reduce tax revenues.
B)It would lower effective interest rates on savings.
C)It would distort incentives to earn income.
D)It would eliminate disincentives to save.

Question

Quizplus · Accepted Answer

Changing the basis of taxation from income earned to amount spent would eliminate disincentives to save because individuals would no longer be taxed on the income they save. This could encourage individuals to save more and help promote long-term economic growth. However, it could also have some unintended consequences, such as encouraging consumption over savings and potentially reducing tax revenues.

What Would Changing the Basis of Taxation from Income Earned