What are 6 policies to influence the distribution of income and wealth to alleviate poverty?
Progressive taxes, national minimum wage, welfare benefits, education and training, reducing unemployment, promoting trickle-down.
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What do progressive taxes involve?
Making higher earners pay a larger percentage of their income in taxation.
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What is the NMW?
A legal minimum wage designed to prevent employers from exploiting those in a relatively low skilled occupations by paying low wages.
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How can welfare benefits improve the distribution?
They can be means-tested in order to target those in greatest need.
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How can education and training improve the distribution?
Raising standards of education and training will help to increase the marginal revenue productivity of the labour, which will reduce occupational immobility and enhance employability.
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What will policies to promote economic growth do?
Raise average incomes while also creating more opportunities for entrepreneurship.
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How can progressive taxes act as a consequence?
They can create disincentives to work, leading to voluntary unemployment, slower growth and reduced income tax revenues.
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How can progressive taxes affect businesses?
They may create disincentives to invest and be entrepreneurial if they relate to corporation tax on business profits or income taxes on the self-employed.
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How can high taxes encourage a brain drain?
High earners move overseas to low tax countries.
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How can the NMW act as a consequence?
If it is set too high, it could lead to increased unemployment and doesn't affect those who are already unemployed.
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How can welfare benefits act as a consequence?
Increasing benefits may reduce incentives to work, as the disposable incomes of low-paid households are higher.
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How can education and training act as a consequence?
It may take a long time to feel the positive impacts, and courses may be expensive or inappropriate for current job vacancies.
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How can reducing unemployment act as a consequence?
Expansionary fiscal and monetary policies have time lags before their full effects are felt, leading to demand-pull inflation, depending on the extent of supply side factors.
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Why may the trickle-down effect not work in reality?
Because the highest earners in society can afford the best tax accountants to help them exploit loopholes in the system in order to minimise the tax they pay.
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Other cards in this set
Card 2
Front
What do progressive taxes involve?
Back
Making higher earners pay a larger percentage of their income in taxation.
Card 3
Front
What is the NMW?
Back
Card 4
Front
How can welfare benefits improve the distribution?
Back
Card 5
Front
How can education and training improve the distribution?
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