Asked by Jacob Rutgers on May 09, 2024
Verified
Individual Retirement Accounts and 401(k) plans make the current U.S. tax system
A) less like European tax systems than it otherwise would be.
B) more like a payroll tax than it otherwise would be.
C) more like an income tax than it otherwise would be.
D) more like a consumption tax than it otherwise would be.
Individual Retirement Accounts
Special financial accounts designated for retirement savings with potential tax advantages, intended to assist individuals in preparing for their retirement years.
401(k) Plans
Retirement savings plans sponsored by employers that allow employees to save and invest a portion of their paycheck before taxes are taken out.
U.S. Tax System
The structured collection of taxes in the United States, including federal, state, and local taxes, imposing charges on citizens and corporations to fund public goods and services.
- Examine the influence of tax policies on consumer saving and expenditure trends.
Verified Answer
JC
Jonathan CastroMay 12, 2024
Final Answer :
D
Explanation :
Individual Retirement Accounts and 401(k) plans allow individuals to defer taxes on income that is saved or invested until it is withdrawn, typically in retirement. This feature makes the U.S. tax system more like a consumption tax, as it taxes money when it is spent rather than when it is earned.
Learning Objectives
- Examine the influence of tax policies on consumer saving and expenditure trends.