What is the main difference between a consumption tax and an income tax?
A) A consumption tax requires households to pay taxes only on the income they have left after consumption,while an income tax requires households pay taxes on all earned income before consumption.
B) A consumption tax requires households to pay taxes only on the income they spend,while an income tax requires households pay taxes on all earned income.
C) A consumption tax always generates less revenue than an income tax.
D) There is no difference between a consumption tax and an income tax.
Correct Answer:
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