A consumption tax would
A)encourage saving because individuals would only pay taxes on income they spend.
B)be progressive because everyone would be subject to the same tax system.
C)be progressive because higher income people spend more than lower income people.
D)be proportional because everyone would be subject to the same tax system.

Question

Quizplus · Accepted Answer

A consumption tax would only tax individuals on the income they spend, not the income they save. Therefore, people would be encouraged to save more, which is typically a positive thing for individuals and the economy. However, the other options (B, C, and D) are incorrect because a consumption tax is not necessarily progressive or proportional, nor would everyone be subject to the same tax system.

A Consumption Tax Would