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Redistributive Tax System
Supply-side economists hold the belief that the introduction of a redistributive tax system would go against the goal of expanding the long-term economic growth over time. Their explanation is that the redistributive tax system would improve the disposable income of the low-income earners. This would have the effect of making the low-income earners more comfortable with working at lower wages, making the goal of expanding economic growth difficult to achieve.
A tax designed to alter the distribution of income or wealth. In practice, the redistribution is usually in the direction of greater equality, but history has recorded rulers who have used taxation to redistribute in their own favour and hence to increase inequality. A system of lump-sum taxation under which some consumers pay positive taxes while others receive subsidies is redistributive: it reduces income inequality if the subsidies are received by low-income consumers and positive taxes are paid by high-income consumers. The redistributive effect of the tax system can only be found by considering the net effect of all taxes; the redistributive effect of government intervention in total must take into account all transfers and taxes.
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