A higher top rate of income tax raises revenue for redistribution but discourages some highly skilled workers from working extra hours. Which evaluation is best?
Redistribution has no opportunity cost
The tax must reduce inequality without affecting output
Progressive taxation is identical to an indirect tax
Greater equality may be achieved at the cost of weaker incentives and lower output
30 exam-style questions on OCR GCSE Economics 3.5 Fiscal policy, covering 3.5.1 Government spending and revenue, 3.5.2 Budget balance, surplus and deficit, 3.5.3 What is fiscal policy, 3.5.4 Calculate effects of taxes and spending, 3.5.5 Analyse effects of taxes and spending, 3.5.6 Costs and benefits of fiscal policy, and 3.5.7 Redistributing income and wealth. Each one has a worked solution and a mark scheme showing where the marks go.