In the United States,

Question

Quizplus · Accepted Answer

Taxes and transfers both play a role in reducing income inequality in the United States. Taxes can be used to redistribute income by taxing higher income households at a higher rate and using the revenue for social programs and transfer payments to lower income households. Transfer payments, such as social security benefits and Medicaid, provide financial support to low-income households and help reduce income inequality. Therefore, both taxes and transfers decreasing income inequality is the correct answer.