Recall the Application. One difference between a value-added tax and an income tax is the value-added tax
A) is a progressive tax. B) is not a consumption tax.
C) does not penalize individuals who save. D) is difficult to collect.
Question 2
Capital gains are taxed at a different rate than income and this reduces revenues the government receives. All else equal, what would happen if capital gains taxes were eliminated?
A) They would have to be replaced by a consumption tax.
B) The government would not be able to spend money on any programs.
C) Everyone would have to pay less in taxes.
D) The deficit would increase because of lack of revenues.