A consumption tax that replaces an income tax
A)only taxes a household on the money it spends.
B)discourages saving.
C)would likely result in a lower level of saving than an income tax.
D)ultimately taxes income twice-once when the household pays income tax and once when the household makes a purchase.

Question

Quizplus · Accepted Answer

A consumption tax only taxes a household on the money it spends, not on its total income or savings. This contrasts with an income tax, which taxes households on their total income regardless of how much they save or spend.

A Consumption Tax That Replaces an Income Tax