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. 

SK
Answered by Sofia K. Economics tutor

4846 Views

See similar Economics IB tutors

Related Economics IB answers

All answers ▸

Why are some government bonds negative?


Why is GDP not an accurate measure of economic growth?


Distinguish between the concepts of income elasticity of demand (YED) and cross price elasticity of demand (XED)


When will a perfectly competitive firm shut down?


We're here to help

contact us iconContact ustelephone icon+44 (0) 203 773 6020
Facebook logoInstagram logoLinkedIn logo

MyTutor is part of the IXL family of brands:

© 2026 by IXL Learning