Question

How does government use taxation to affect distribution of income

Answer 1

A majority of taxes are payed by the rich (top 20% of earners pay 84% of taxes - Wall Street Journal), while those who make less money, or no money, pay less (or no) taxes, while still benefiting from government entities (schools, parks, etc.). In addition, the progressive tax system that increases the percentage of taxes an individual pays the more money they make has shown to deter people from economic growth. If a person is nearing the next tax bracket, they may think twice about getting the raise or expanding the business, if the taxation will be at a higher rate.