One of the benefits from switching taxation away from income towards consumption is that:
A)it will necessarily increase tax revenues
B)it is always administratively simpler
C)it distorts incentives to earn income
D)it eliminates disincentives to save

Question

Quizplus · Accepted Answer

Switching taxation away from income towards consumption can eliminate disincentives to save because income used for saving will not be taxed until it is consumed. This can encourage individuals to save more, invest in the economy, and promote long-term growth. However, it is not guaranteed to increase tax revenues or always administratively simpler, and it can distort incentives to earn income for those who rely on high levels of consumption.

One of the Benefits from Switching Taxation Away from Income