UPSC Prelims 1996·GS1·economy·public finance

A redistribution of income in a country can be best brought about through

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  1. Aprogressive taxation combined with progressive expenditureCorrect
  2. Bprogressive taxation combined with regressive expenditure
  3. Cregressive taxation combined with regressive expenditure
  4. Dregressive taxation combined with progressive expenditure

Explanation

The correct option is A because of the specific way progressive policies target different income groups to reduce inequality. Progressive taxation means that the rate of tax increases as the income of the individual increases. This ensures that the wealthy contribute a larger share of their income to the government treasury. Progressive expenditure refers to government spending that disproportionately benefits the poor, such as subsidies, free healthcare, and public education. When the government collects more from the rich through progressive taxes and spends that revenue on social welfare schemes for the poor through progressive expenditure, it effectively transfers wealth from the top to the bottom. This combination is the most effective fiscal tool for reducing the gap between the rich and the poor and achieving a fair redistribution of income.
economy: A redistribution of income in a country can be best brought about through
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