Econimic question:

Comment on the effectiveness of one policy which could be used by a government to reduce income equality:


Progressive tax is the most obvoius answer. It means that earners are divided into groups and the tax level is rising with the income. It means that richer give back higher proportion of their income to the state, and poorer give lower.

Some say that this policy is fair, because it causes that richer actually supply poorer, and the income inequality is partialy leveled.
However, it might be inefficient, as higher income groups are usually mobile and they can move to countries with lover income tax. People also may feel discouraged to work harder and, therefore, get promoted, because they will pay higher taxes after a pay rise.
There also is a moral problem with progressive tax. Some say that, through p.t., state actually punishes these people, who are hard-working and clever, and promotes less efficient and less gifted. After all, why someone who had been working hard has to give his money to someone who was lazy.