A country has an income tax in which the first $10 000 of earnings is not taxed, the following $20 000 is charged at 20% and any income above $30 000 is taxed at a maximum rate of 40%. In addition, it imposes a sales tax of 10% on most goods, while certain essential items are free from the tax. Which set of tax changes would be most likely to produce a more equal spread of income in the country?
- Aincome tax: a higher tax-free allowance; sales tax: a higher rate of tax
- Bincome tax: a higher top rate of tax; sales tax: a lower rate of tax
- Cincome tax: a lower tax-free allowance; sales tax: a higher number of exempt goods
- Dincome tax: a lower top rate of tax; sales tax: a lower number of exempt goods