Q. Through which of the following a redistribution of income in a country can be best brought about?
Answer: Progressive taxation combined with progressive expenditure
Notes: Redistribution of income and redistribution of wealth are respectively the transfer of income and of wealth (including physical property) from some individuals to others by means of a social mechanism such as taxation, charity, welfare, public services, land reform, monetary policies, confiscation, and divorce or tort law. Progressive Tax is a process in which as the income of a person increases, rate of income tax on the income also goes up. Regressive Tax is the process according to which as income of a person goes up, rate of tax goes down. A progressive tax structure improves the distribution of income.