Practise IB Economics SL 3.4.7 by explaining how taxation and redistribution affect income inequality, poverty and economic welfare with marked exam evidence.
Using real-world examples, evaluate the view that inequality can best be reduced through the use of taxation.
Answers may include:
- Terminology: inequality, taxation.
- Explanation: of the view in terms of the use of progressive taxes and how they can work to make the post-tax distribution of income more equal;
the difficulty of reducing income inequalities through any means other than progressive taxation;
the selective use of indirect taxes involving higher taxes on luxury goods consumed by the better off and lower taxes/no taxes on essential items needed by the poor.
- Diagram: use of an appropriate diagram, such as the Lorenz curve to show the impact on inequality.
- Synthesis (evaluate): a challenge to the view in terms of the possible disincentive effects of progressive taxation and the problems of using indirect taxes;
a consideration of alternative measures such as use of transfer payments, a universal basic income, minimum wages, policies to reduce discrimination, other policies to reduce inequalities of opportunity, such as health and education.
- Examples: real-world examples of changes in taxation and/or other policies reducing inequality.
A maximum of [12] should be awarded if only changes in taxation are considered.
N.B. It should be noted that definitions, theory and examples that have already been given in part (a), and then referred to in part (b), should be rewarded.
Examiners should be aware that candidates may take a different approach which, if appropriate, should be rewarded.
Assessment Criteria
Marks
Level descriptor
0
- The work does not reach a standard described by the descriptors below.
1-3
- The response indicates little understanding of the specific demands of the question.
- Economic theory is stated but it is not relevant
- Economic terms are stated but they are not relevant.
- The response contains no evidence of synthesis or evaluation.
- A real-world example(s) is identified but it is irrelevant.
4-6
- The response indicates some understanding of the specific demands of the question.
- Relevant economic theory is described.
- Some relevant economic terms are included.
- The response contains evidence of superficial synthesis or evaluation.
- A relevant real-world example(s) is identified.
7-9
- The response indicates understanding of the specific demands of the question, but these demands are only partially addressed.
- Relevant economic theory is partly explained.
- Some relevant economic terms are used appropriately.
- Where appropriate, relevant diagram(s) are included.
- The response contains evidence of appropriate synthesis or evaluation but lacks balance.
- A relevant real-world example(s) is identified and partly developed in the context of the question.
10-12
- The specific demands of the question are understood and addressed.
- Relevant economic theory is explained.
- Relevant economic terms are used mostly appropriately.
- Where appropriate, relevant diagram(s) are included and explained.
- The response contains evidence of appropriate synthesis or evaluation that is mostly balanced.
- A relevant real-world example(s) is identified and developed in the context of the question.
13-15
- The specific demands of the question are understood and addressed.
- Relevant economic theory is fully explained
- Relevant economic terms are used appropriately throughout the response.
- Where appropriate, relevant diagram(s) are included and fully explained.
- The response contains evidence of effective and balanced synthesis or evaluation.
- A relevant real-world example(s) is identified and fully developed to support the argument.