IB Economics SL 3.4.7 Taxation and Redistribution Questions
Practise 3.4.7 Taxation and redistribution in IB Economics SL by reviewing the concepts and applying them to marked questions.
- Syllabus
- First assessment 2022
- Course
- Economics SL
- Level
- SL
Exam points
- Progressive, regressive, and proportional taxes affect distribution differently
- Average and marginal tax rates are used to analyse tax burdens
- Direct taxes include personal income, corporate income, and wealth taxes
- Indirect taxes affect expenditure and can be regressive
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IB Economics SL 3.4.7 Taxation and Redistribution Questions question 1
[Maximum number: 15]
Evaluate the impact on efficiency in the allocation of resources when the government uses taxation to promote equity.
Answers may include:
- definitions of allocative efficiency, taxation, equity
- a diagram is not required for this question
- explanation that using taxation can promote equity in the distribution of income but this can lead to negative effects on efficiency. An increase in progressive tax may reduce the incentive to work, reduce FDI in a country and if firms' costs increase because of higher tax their prices might rise
- examples of where taxation has been used to promote equity
- synthesis or evaluation.
Evaluation may include: consideration of the extent to which there is a trade-off between equity and efficiency and why an attempt to improve equity can have positive and negative effects on efficiency. Evaluation can consider the impact on incentives to work and whether higher taxation does actually lead to disincentives.
Assessment Criteria
Part (b) 15 marks
Level 0 (0 marks): The work does not meet a standard described by the descriptors below.
Level 1 (1-5 marks): There is little understanding of the specific demands of the question. Relevant economic terms are not defined. There is very little knowledge of relevant economic theory. There are significant errors.
Level 2 (6-9 marks): There is some understanding of the specific demands of the question. Some relevant economic terms are defined. There is some knowledge of relevant economic theory. There are some errors.
Level 3 (10-12 marks): There is understanding of the specific demands of the question. Relevant economic terms are defined. Relevant economic theory is explained and applied. Where appropriate, diagrams are included and applied. Where appropriate, examples are used. There is an attempt at synthesis or evaluation. There are few errors.
Level 4 (13-15 marks): There is clear understanding of the specific demands of the question. Relevant economic terms are clearly defined. Relevant economic theory is clearly explained and applied. Where appropriate, diagrams are included and applied effectively. Where appropriate, examples are used effectively. There is evidence of appropriate synthesis or evaluation. There are no significant errors.
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