Gives a picture of inequalities in the distribution of income in the UK

1. Explain, with reference to the table, the differences in original and final income. (20%)
2. Discuss which group bears the greatest tax burden. (10%)
3. Consider which group gains the greatest advantage from the benefit system. (10%)
4. From your consideration of the data, discuss the impact of the tax and benefit systems on
incentives to work and enterprise. (25%)
5. From your understanding of macro-economics, suggest the overall impact on the UK
economy of significantly increasing the tax burden on the top quintile and spending the
additional tax revenue on reducing the direct tax payable by the lowest two income
quintiles. (35%)

Sources
Sloman, Economics, Pearson 2006, chapter 10 or another equivalent textbook will give you
some additional material for this assignment. The websites of HM Customs and Revenue and
the Institute of Fiscal Studies will contain useful wider research material.

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