Answer: Option B
Answer: (b)
Redistribution of income and redistribution of wealth are respectively the transfer of income and of wealth (including physical property) from some individuals to others by means of taxation, monetary policies, etc. This can be achieved with a combination of progressive taxation and progressive expenditure.
A progressive tax is one such means since they are imposed in an attempt to reduce the tax incidence of people with a lower ability to pay, as such taxes shift the incidence increasingly to those with a higher ability-to-pay. Regarding the distributive impact of public expenditure, the principle of maximum social advantage should be the underlying criteria of public spending. Hence, progressive public expenditure is the best antidote to reduce income inequality existing in society.
The expenditure on social security like free medical aid, free education, subsidized houses etc. is progressive in nature. For example, if only the lower-salaried employees were given free residential quarters, it is a case of progressive expenditure. Such expenditure helps to reduce the glaring inequality existing in the distribution of income. Progressive redistributive expenditure may also take the shape of provision of cheap or free services and commodities.
Free primary education, free medical aid, subsidies to food and housing and the provision of free meals to school children are examples of this type of progressive grant. Such expenditure benefits the poorer among the poorest and helps to raise the living standards of the weaker sections.