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