Which of the following explains one difference between a consumption tax and an income tax?
A)An income tax is a regressive tax; a consumption tax is a progressive tax.
B)Under a consumption tax,households pay taxes only on the part of income they spend; under an income tax,households pay taxes on all income earned.
C)Under an income tax,present consumption is taxed more heavily than future consumption; under a consumption tax,future consumption is taxed more heavily than present consumption.
D)Savings are taxed more heavily under a consumption tax than under an income tax.

Question

Quizplus · Accepted Answer

A consumption tax taxes only the part of income that is spent, while an income tax taxes all income earned regardless of whether it is spent or saved.

Which of the Following Explains One Difference Between a Consumption