Consumption tax on the loan able funds market graphically

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The largest source of federal tax revenue is the personal income tax. There has been discussion of replacing the personal income tax with some type of consumption tax. Under an income tax, all income is subject to tax. Under a consumption tax, only that portion of income that is spent is taxable. In other words, with a consumption tax, taxes can be avoided by saving money.

Show the effect of moving to a consumption tax on the loan able funds market if people react favourably to the incentive to save. Choose which curve or curves you believe are affected. Then click on a curve and drag it in the direction you believe it will shift.

Reference no: EM1314060

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Consumption tax on the loan able funds market graphically : Show the effect of moving to a consumption tax on the loan able funds market if people react favourably to the incentive to save. Choose which curve or curves you believe are affected.

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