Intersting little PROBLEM - please help
Had this debate in class today. To do with income inequality.
Would changing the 40% marginal tax rate from being applied to income over £45K to incoem over £43K widen or narrow inequality ?
Ceteris paribus, all gross incoems remaining constant.
I would have thought inequality would definitely decrease because your bringing the net incomes of everyone earning over £43,000 down?
However people would argueing that it would depend on how many people were at either end of the income scale
How would it change the lorenz curve also ?