M.D. Many people do not understand how our tax laws effect our health care system. The awesome but subtle power of taxes to change human behavior is the reason for this misunderstanding. After all, money is why we do the bidding of others. We give our time, which is part of our lives to obtain it.
Income tax tends to discourage savings.
When people earn income, they can give it away, have it taxed away, spend it or save it. A consumption tax does not tax savings while an income tax leads to a disproportionate tax on savings. People tend to spend a fixed amount of money on consumption for the necessities of food, clothing, shelter, etc. With an income tax, people tend to continue the consumption while the part of their income they would have saved gets taxed away. Since interest and dividends are also taxed, there is less incentive for them to save.