The figure given below shows the Lorenz curves of two countries (Country A and Country B).Figure 19.2
Total income (cumulative percentage)
Total population (cumuative percentage)

-Which of the following tax structures helps in reducing income inequality?

Question

The figure given below shows the Lorenz curves of two countries (Country A and Country B).Figure 19.2
Total income (cumulative percentage)
Total population (cumuative percentage)
 
-Which of the following tax structures helps in reducing income inequality?

Quizplus · Accepted Answer

A progressive tax structure means that the tax rate increases as income increases. This helps to reduce income inequality by taking a larger share of income from those with higher incomes and using the revenue to provide services and benefits to those with lower incomes. Proportional and regressive tax structures do not have this effect, and an indirect tax structure, such as a sales tax, can actually exacerbate income inequality by placing a greater burden on those with lower incomes. A combination of proportional and regressive tax structure would also not be effective in reducing income inequality.

The Figure Given Below Shows the Lorenz Curves of Two