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There are a range of policies the government could use to income
inequality. These include:
1. Change the tax and benefit system
• increase the higher rate of income tax. This will make the tax system more progressive and will reduce the income of the top earners. The money could then be redistributed to the poorest
• cut the lower rate of income tax and increase the level of the tax-free allowance. This should reduce the poverty trap and encourage people to look for work
• reduce the availability of universal state benefits such as child allowance and switch towards more means tested benefits such as the EMA. This would save the government money and the money will go to those who need it most
• link benefits to average earnings instead of average prices.
2. Measures to reduce unemployment
• unemployment is one of the major causes of poverty. Therefore decreasing unemployment will decrease poverty
• the government have used special employment measures such as the new deal and the welfare to work programme to improve the job prospects of the unemployed
• regional policy assistance. The government can focus attention on areas of high unemployment and encourage firms to locate there.
3. Increasing the national minimum wage
• the NMW was introduced in 1999. It helps to increase the incomes of the low paid and also improve the incentive for people to find work.
marlinbito answered the question on July 6, 2018 at 18:39
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