Describe a tax change that would cause the Gini coefficient to not change very much and...

Describe a tax change that would cause the Gini coefficient to not change very much and explain why.

Expert Solution

a regressive taxation will not help reduce income inequality in a country hence gini coefficint that is a measure of income distribution in a given population would not change much . taxation should be levied according to the ability to work,save and invest then only it can reduce income inequality .until the the taxation should not be according to ability to work ,save and invest ,the poors have to suffer and income disparity would rise only in that economy .

In a Regresssive taxation system the tax rate diminishes as the taxable amount increasesin other words taxation decreases as the incpme of taxpayers increases hence this type of change would cause gini coefficient to change very much. hence poors have to suffer the burden of taxation and in this taxation system poors become more poors and rich become more richer and poors become more poors.

Rahul Sunny answered 2 years ago

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