What level of income inequality is acceptable? - Purely economic analysis will not lead to an answer as to exactly how much inequality is acceptable or appropriate.
- This is very much a normative issue.
- What can be agreed upon is the fact that market economies do result in inequality of income.
REDISTRIBUTION OF INCOME IN AN ECONOMY: TAXATION - Governments at all levels (municipal, provincial, state, national) impose a huge array of taxes for a range of reasons.
- In this section, we are looking at the way taxation is used to change the distribution of income.
Including: - Direct Taxes
- Indirect Taxes
- Progressive Taxes
- Regressive Taxes
- Proportional Taxes
Direct Taxes - Direct taxes are imposed on peoples’ income or wealth, and the profits of firms.
- The income from households comes in various forms such as employment income and interest on savings and dividends from the ownership of shares.
- Some of the income is taxed directly by employers, while some is charged based on the annual “tax return” form that people are usually obliged to fill out.
- Theoretically such taxes are unavoidable, because households and firms are obliged to declare their full income to governments and pay taxes accordingly.
- Indirect taxes are also known as expenditure taxes or consumption taxes and have different names in different countries.
- Canada and Australia have a “goods and services tax” (GST)
- The UK has a “value added tax” (VAT) and so does Austria (Mehrwertsteur)
- In this case, consumers who buy the goods pay the tax to the seller or producer who then pays the tax to the government.
Do'stlaringiz bilan baham: |
