Governments frequently seek to narrow income inequalities. The diagram illustrates the effects of applying taxation and benefits in an attempt to reach this objective. What can be concluded about the effects of taxes and benefits from the diagram?
- AAll income groups are better off except those earning more than 40 000 dollars per year.
- BBenefits paid to the lower income groups are not a burden because they are not paid out of tax revenues.
- CThe average final income of the top 20% exceeds the combined final incomes of the other groups.
- DThe progressive taxation system still favours the top 20% over the bottom 20% of households.