Lower-Income Households Spend Largest Share of Income

Research Report

Lower-Income Households Spend Largest Share of Income

Abstract

Recently, there has been a renewed interest in large-scale tax reform, namely a broad-based tax on consumption. Data from the Consumer Expenditure Survey give reason to worry about the likely regressivity of a consumption tax. The data indicate that low-income households spend virtually all of their income while high-income households spend less than 40 percent.

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