Progressive Redistribution via Income Threshold

Steps:

• Identify the policy: A fixed $500 payment to individuals earning under$100,000 annually.
• Recall tax/transfer classifications: Progressive policies favor lower-income groups by providing disproportionate benefits relative to income.
• Analyze impact: The payment represents a larger share of income for low earners (e.g., 5% for $10,000 earner) versus negligible for those near$100,000.
• Classify: This targets and aids lower earners, fitting progressive criteria.

Why B is correct:

• Progressive transfers, per fiscal policy definitions, redistribute resources to lower-income individuals, reducing inequality by giving flat benefits that scale inversely with income.

Why the others are wrong:

• A: Neutral applies equally across all income levels, not just below a threshold.
• C: Proportional scales benefits as a fixed percentage of income for everyone.
• D: Regressive disproportionately burdens or minimally benefits lower incomes, opposite of this targeted aid.

Final answer: B