A change from an income tax to a consumption tax system would cause the greatest increase in taxes owed by those who currently put part of their savings into 401(k)retirement plans and Individual Retirement Accounts.

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The change from an income tax to a consumption tax system would not necessarily increase taxes owed by those who currently put part of their savings into 401(k) retirement plans and Individual Retirement Accounts. A consumption tax system would tax spending rather than income, so those who save and invest instead of spending would not be impacted as much. There are proposals for how to handle retirement accounts under a consumption tax system, but it is not a given that taxes would increase for those with retirement savings.

A Change from an Income Tax to a Consumption Tax