A lump-sum tax does not causes the after-tax consumption schedule to be flatter than the before-tax consumption schedule. Hence, this statement is:
False
What is Lump-sum tax?
A lump-sum tax is a type of taxation that is based on a set amount rather than the actual circumstances of the taxable organisation. In this case, the entity cannot modify their obligation. In contrast to a per-unit tax, a lump-sum tax does not grow in size as output grows.
A lump-sum payment is one that is made all at once, as opposed to periodic payments. A lump-sum payout is not always the best option; for some, it may make more sense to have the cash annuitized as periodic instalments. An annuity may have a larger net present value (NPV) than a lump amount based on interest rates, tax position, and penalties.
Therefore, a lump-sum tax does not causes the after-tax consumption schedule to be flatter than the before-tax consumption schedule. Hence, this statement is:
False
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