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Principles of Economics 2e

2nd Edition
Steven A. Greenlaw; David Shapiro
ISBN: 9781947172364

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BuyFindarrow_forward

Principles of Economics 2e

2nd Edition
Steven A. Greenlaw; David Shapiro
ISBN: 9781947172364
Textbook Problem

Redistribution of income occurs through the federal income tax and government antipoverty programs. Explain whether or not this level of redistribution is appropriate and whether more redistribution should occur.

To determine

Whether the current level of redistribution is appropriate or more redistribution should occur.

Explanation

Redistribution refers to the government policy through which government taxes the rich and uses the tax proceeds for welfare of the poor. Currently, redistribution takes place through federal income tax and government anti-poverty programs. It is difficult to objectify the appropriate level of redistribution. However, it can be said that redistribution should be such that the inequality and poverty are reduced while providing appropriate incentives to work and to be productive.

The taxes should not be high enough to discourage businesses. But the progressive taxation system can be redesigned to increase the effective income tax (total taxes paid divided by the total income from all sources)...

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