Multiple choice

Which of the following decreases gap between haves and have-nots?

  1. Imposing heavy taxes on essential goods

  2. Following policy of progressive tax

  3. Imposing low taxes on luxury goods

  4. None of these
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

It decreases the gap between haves and have-nots. When the policy of progressive taxation is followed, the rich have to pay higher rates of tax and the poor have to pay low rates of taxes. The rich have the capacity to pay high rates of tax, because even after paying high rate of tax they are left with sufficient income. But if more income is withdrawn from the rich and spent for welfare of the poor, it can decrease the gap between haves and have-nots to some extent.

Keep practicing — related questions