Which tax policy will lead to a tax system with increased equality?

Question

Quizplus · Accepted Answer

Increasing consumption tax such as a value-added tax (VAT) or a sales tax can lead to increased equality as it is a more regressive tax, meaning that it falls more heavily on those who consume more. This can help to reduce the gap between the wealthy and low-income earners, as higher-income earners typically consume more. Reducing taxation of capital income such as dividends and capital gains, as in option D, would likely benefit the wealthy and thus worsen income inequality. Increasing the limit on retirement savings plans or tax-free savings accounts may benefit those who can afford to save and invest, rather than addressing income inequality directly.

Which Tax Policy Will Lead to a Tax System with Increased