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

4767 Views

See similar Economics IB tutors

Related Economics IB answers

All answers ▸

Distinguish between direct and indirect tax.


Explain the possible negative externalities that might arise from the increased use of cars (10 marks)


Evaluate the advantages of perfectly competitive and monopolistic markets in the long run.


Describe why excess profits can't be made in a competitively perfect market.


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:

© 2025 by IXL Learning