Explain two policies governments might use to redistribute income.

A government can use a progressive tax system to redistribute income. The way this works is that as income rises, you pay a higher portion of that income in taxes. This is probably the most common way to redistribute. It also holds that below a certain threshold, no tax is paid at all. Governments also use tax revenues to spend on for example merit goods. These are goods which the government deem necessary for all people’s and so access should not depend on income. It could be health care, education, sanitation, water and electricity. Usually these types of goods and services are provided for free or heavily subsidised. 

Answered by Sofia K. Economics tutor

3325 Views

See similar Economics IB tutors

Related Economics IB answers

All answers ▸

Explain the impact an increase in cost of productions might have on the market price and output of a good


explain how price act as a signal to consumer and producer?


What is the definition of demand?


Explain why a profit-maximizing monopolist would never choose to operate on the inelastic portion of its demand curve


We're here to help

contact us iconContact usWhatsapp logoMessage us on Whatsapptelephone icon+44 (0) 203 773 6020
Facebook logoInstagram logoLinkedIn logo

© MyTutorWeb Ltd 2013–2024

Terms & Conditions|Privacy Policy
Cookie Preferences