Progressive taxation increases revenue while reducing inequality

Steps:

• Identify goals: Reduce budget deficit (increase revenue or cut spending) and poverty (redistribute income to low earners).
• Recall fiscal policy tools: Taxes affect revenue; progressive taxes target higher incomes disproportionately.
• Evaluate progressive income tax increase: Raises more revenue from wealthy, funding deficit reduction without broad cuts.
• Assess poverty impact: Higher taxes on rich narrow income gaps, aiding low-income support indirectly.

Why C is correct:

• Progressive tax definition: Rates rise with income, generating revenue from high earners while promoting equity per ability-to-pay principle.

Why the others are wrong:

• A: Lowers revenue, worsening deficit; benefits wealthy more, increasing inequality and poverty.
• B: Cuts spending, reducing deficit but directly harms poor by slashing welfare, raising poverty.
• D: Boosts anti-poverty aid but increases spending, enlarging deficit without revenue gains.

Final answer: C