A-LevelEconomicsGovernment microeconomic intervention9708/12 · Feb/Mar 2024 · Q141 Mark
A country uses an income tax under which the first $10000 of income is tax-free, the next $20000 is taxed at 20% and any income over $30000 is taxed at a top rate of 40%. It also levies a sales tax of 10% on most products. Which combination of tax changes is most likely to create a more equal distribution 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
✓ Correct answer
B: income tax a higher top rate of tax, sales tax a lower rate of tax
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