Practise comparing progressive taxes, negative income tax, universal or means-tested benefits and supply-side measures by their distributional impact, targeting and work incentives.
A government has a policy where income tax is paid only after the first $ 20000 of income has been earned.
What would make the government's policy more equitable?
Decreasing the threshold for paying income tax to $ 10000 for all taxpayers.
Integrating the tax and welfare systems by introducing a negative income tax.
Introducing universal benefits that are available to all citizens irrespective of wealth.
Means testing all benefits so that they remain the same even if real incomes fall.
B