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Suppose the United States were to convert its tax system from an income tax to a national sales tax on sales of goods and services.

Suppose the United States were to convert its tax system from an income tax to a national sales tax on sales of goods and services. Certain necessities, like food, would be exempted from taxation, and low-income households would be granted tax refunds. Would such a tax system eliminate incentives to shift activities (a) from one period to the next, (b) from one type to another, and (c) from one pocket to another? Explain.

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