A shift from progressive direct taxes to a federal sales or value-added tax would probably encourage investment more than consumption.

Question

Quizplus · Accepted Answer

A federal sales or value-added tax is a consumption tax, meaning that individuals or businesses pay taxes on the goods and services they purchase. This would discourage consumption and encourage savings, which could lead to greater investment in the economy. Progressive direct taxes, on the other hand, are levied on income or wealth and may discourage investment by reducing returns.

A Shift from Progressive Direct Taxes to a Federal Sales