A country operates a negative tax income regime. In the diagram, the curve NT represents the country’s original tax schedule. When the tax rate is altered, the schedule moves to NT1. What effect will this have on work incentives and the after-tax distribution of income?
- Awork incentives strengthen; distribution less equal
- Bwork incentives strengthen; distribution more equal
- Cwork incentives weaken; distribution less equal
- Dwork incentives weaken; distribution more equal