What Is the Main Difference Between a Consumption Tax and an Income

question 43

Multiple Choice

What is the main difference between a consumption tax and an income tax?

• A)A consumption tax requires households to pay taxes only on the income they have left after consumption,while an income tax requires households pay taxes on all earned income before consumption.
• B)A consumption tax requires households to pay taxes only on the income they spend,while an income tax requires households pay taxes on all earned income.
• C)A consumption tax always generates less revenue than an income tax.
• D)There is no difference between a consumption tax and an income tax.