Inequitable du=istribution

What can inequitable distribution of wealth lead to

• Market failure

• Increased crime rates

• Life expectancy drop

• Decrease in living standards

Meaning of equitable

Fair and not the same as equal

Income

measures the flow of money a person or economy receives each year

Wealth

the sum, or stock, of all your assets added up

Progressive income tax

This is where the rich pay higher percentage of their income in tax than the poor which reduces inequitable distribution of income

Evaluation of progressive tax policies

Fiscal drag-They need high tax rates, which lead to lower incomes for higher earners and as a result this will lead to them consuming less in the economy and causing the multiplier effect. AD will shift inwards and real GDP falls which leads to a reduction in derived demand and in turn increase in unemployment.

Overly generous benefit systems can create dependency- incentive to claim benefits ahead of a job in the long run