A government aims to reduce inequality in income between the richest and poorest members of society. It introduces means tested benefits for workers on low incomes. To fund this, income tax rates for the highest paid will rise. What is the most important strength and weakness of this policy approach?
- Astrength: benefits are only given to those in need; weakness: poor non-workers will be no better off
- Bstrength: intergenerational equity is improved; weakness: tax avoidance is more likely
- Cstrength: workers will be encouraged to work more hours; weakness: taxation has become more regressive
- Dstrength: the policy approach will be efficient to operate; weakness: wealth distribution will be affected more than income distribution