Income tax on the wealthy to finance the welfare for the poor causes income redistribution.This is an example for the trade-off

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Quizplus · Accepted Answer

The trade-off here is between income redistribution and economic efficiency. Implementing a high income tax on the wealthy to finance welfare programs for the poor may lead to income redistribution, but it can also discourage investment and innovation by the wealthy, leading to reduced economic growth. Therefore, the best choice would be to strike a balance between income redistribution and economic efficiency. This can be achieved by implementing a progressive tax system, where the wealthy pay a higher percentage of their income in taxes, but still incentivizing them to invest and innovate. Ultimately, the goal should be to create a society where everyone has equal opportunities to succeed and prosper.

Income Tax on the Wealthy to Finance the Welfare for the Poor