This lesson plan discusses the redistribution of wealth through taxation. In this lesson, students use different household scenarios to examine the ability-to-pay principle of taxation. Students analyze the household scenarios using the progressive tax system and then re-examine the same scenarios using a flat tax, to compare the two tax systems.
Mar 1, 2012
U.S. Income Inequality: It''s Not So Bad
Although income inequality is seen as a social ill by many people, it is important to understand that income inequality has many economic benefits and is the result of, and not a detriment to, a well-functioning economy. The unconstrained opportunity for individuals to create value for society, which is reflected by their income, encourages innovation and entrepreneurship. Economic research has documented a positive correlation between entrepreneurship/innovation and overall economic growth. Sound economic policy to reduce poverty would lift those out of poverty (increase their productivity) while not reducing the well-being of wealthier individuals. Tools to implement such a policy include investments in education and job training.