Answer: Option B
Answer: (b)
Progressive tax means a higher income tax rate is high. Now in personal income tax (PIT), we have different slabs.
For example, for an Income Slab of less than Rs. 2.5 lakh 0% tax rate. For Rs. 2.5 to 5 lakhs income slab the tax rate is 5% etc.
For income of above Rs. 10 lakh the rate is 30%, which means who earn Rs. 15 lakhs, he also pays 30% and those who earn 30 lakhs, they also pay 30%.
But if we create another slab that income is above Rs. 20 lakhs the rate will be 35%, then it will be more progressive.
Redistribution of income means taking money from the rich and giving it to the poor.
When money is with rich people it may not increase their consumption much because they are already consuming everything but when it reaches the poor, they will be able to consume more with the same money, which increases the demand for goods and services in the economy.
So, income redistribution helps in stimulating the economy.