A consumption tax that replaces an income tax a

Economics Aug 15, 2020

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.

Expert Solution

A consumption tax that replaces an income tax only taxes a household on the money it spends. The tax base of such a tax is the money spent on consumption. this includes taxes such as sales tax, value added tax etc. This tax is also known as expenditure tax, consumed income tax and cash flow tax.

Archived Solution

Unlocked Solution

You have full access to this solution. To save a copy with all formatting and attachments, use the button below.

Already a member? Sign In

Important Note: This solution is from our archive and has been purchased by others. Submitting it as-is may trigger plagiarism detection. Use it for reference only.

For ready-to-submit work, please order a fresh solution below.

Or get 100% fresh solution

Get Custom Quote