Taxation and Redistribution
Economics of Inequality and Poverty
AO3·AO4
Syllabus requirement
Role of progressive, regressive, and proportional tax systems in reducing income and wealth inequality. Includes direct taxes (personal income, corporate, wealth) and key concepts like marginal and average tax rates.
Assessment objectives
AO3 Synthesis and EvaluationAO4 Use of Appropriate Skills
Summary
This topic explains how taxation is used to redistribute income and wealth by altering the distribution of economic resources and funding public services or transfers. It describes different tax structures — progressive, proportional and regressive — and explains direct taxes, marginal and average tax rates, and how the redistributive outcome depends on both tax design and how revenue is spent.