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

2656 Views

See similar Economics IB tutors

Related Economics IB answers

All answers ▸

Why are some government bonds negative?


Using diagrams, explain how the incidence of an indirect tax may be affected by the price elasticity of demand.


Assuming an increase in the market demand for petrol, analyse the role of the price mechanism in reallocating resources.


What is the definition of demand?


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