Economics (AS & A Level) · Oct / Nov 2023 · Paper 31 · Question 25

A government wishes to improve the income distribution between the richest and poorest in society. It introduces means tested benefits for workers on low incomes. To pay for this, income tax rates for the highest paid will increase. What is the most significant strength and weakness of this policy approach?

1. Astrength: benefits are only given to those in need; weakness: poor non-workers will be no better off
2. Bstrength: intergenerational equity is improved; weakness: tax avoidance is more likely
3. Cstrength: workers will be encouraged to work more hours; weakness: taxation has become more regressive
4. Dstrength: the policy approach will be efficient to operate; weakness: wealth distribution will be affected more than income distribution

As printed in the paper