4.1.7.3 Government policies to alleviate poverty and to influence the distribution of income and wealth Flashcards
How does progressive taxation reduce inequality?
Higher earners pay larger % of income (e.g., UK: 20% basic rate → 45% additional rate). Funds welfare/services for low-income groups.
Example: UK personal allowance (£12,570 tax-free).
What is the evaluation of progressive taxation?
✓ Reduces income inequality directly.
✗ May reduce work incentives (Laffer curve effect).
How does inheritance tax affect wealth distribution?
Reduces intergenerational wealth transfer (e.g., UK: 40% on estates >£325k).
Example: Prevents ‘wealth dynasties.’
What is the evaluation of inheritance tax?
✓ Promotes meritocracy.
✗ May encourage tax avoidance.
How does the National Minimum Wage (NMW) alleviate poverty?
Sets wage floor (UK: £10.42/hour for over-23s in 2023). Prevents worker exploitation.
What is the evaluation of the National Minimum Wage (NMW)?
✓ Reduces in-work poverty.
✗ Risk of unemployment if set too high.
How do public services reduce inequality?
Free healthcare/education (e.g., NHS, state schools) → equal opportunities.
Example: Finland’s education system reduces skills gap.
What is the evaluation of public services?
✓ Long-term poverty reduction.
✗ High tax burden required.
How has economic growth reduced poverty historically?
UK post-WWII: Growth → wealth redistribution. China (1985–2001): 450M lifted from poverty. India: Growth → falling poverty rates.
What is the evaluation of economic growth and poverty?
✓ Sustainable solution.
