Transforming the tax base of an income tax by subtracting savings has the advantage that _____.

Name: Transforming the tax base of an income tax by subtracting savings has the advantage that _____.
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Question

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By subtracting savings from income, only consumption is being taxed, which allows for a progressive rate structure to be applied to a consumption tax. This would help ensure that those with higher levels of consumption (and presumably higher levels of income) pay a higher amount of tax.

Transforming the Tax Base of an Income Tax by Subtracting