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

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

ECON MACRO
ECON MACRO
5th Edition
ISBN:9781337000529
Author:William A. McEachern
Publisher:William A. McEachern
Chapter11: Fiscal Policy
Section: Chapter Questions
Problem 1.7P
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A consumption tax that replaces an income tax a. only taxes a household on the money it spends. b. ultimately taxes income twice-once when the household pays income tax and once when the household makes a purchase. c. discourages saving. d. would likely result in a lower level of saving than an income tax.
Transcribed Image Text:A consumption tax that replaces an income tax a. only taxes a household on the money it spends. b. ultimately taxes income twice-once when the household pays income tax and once when the household makes a purchase. c. discourages saving. d. would likely result in a lower level of saving than an income tax.
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