Assume that two people have the same income.Under the U.S.tax code,someone who chooses to save some income to consume more later is taxed _________ than someone who chooses to spend all of the income now,which is ________.

Question

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The U.S. tax code favors spending over saving because income that is saved is subject to taxes (such as capital gains taxes) when it is later consumed, while income that is spent immediately is not subject to additional taxes. This creates a bias for immediate consumption, which is economically inefficient as it discourages saving and investment. Therefore, someone who chooses to save some income to consume more later is taxed more than someone who chooses to spend all of the income now, which is inefficient.

Assume That Two People Have the Same Income