Evaluate government policies that could be used to reduce income inequality and wealth inequality in a developed country of your choice. 25 marks

Essay plan:
Distinction between income and wealth inequality
1st point: income inequality --> increase income tax --> why would this reduce income inequality? --> more tax revenue for government --> able to invest in health and education for the poor --> example of income tax rise in EU1st evaluation: why may increased income tax not reduce income inequality? (Laffer curve/ tax evasion)
2nd point: wealth inequality --> inheritance tax --> reduced wealth for the rich since a significant % has been taxed by the government --> wealth tax rise in Spain2nd evaluation: not reduce wealth inequality? --> asset rich individuals may use legal loop holes/ tax havens to avoid paying tax --> no decrease in wealth inequality
Conclusion: would the policies be appropriate? --> opinion of which one would be more effective and why

MF
Answered by María F. Economics tutor

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