What is the role of taxation in reducing income inequality?

Taxation plays a key role in reducing income inequality by redistributing wealth from higher-income individuals to lower-income ones. Progressive taxes, such as income tax, ensure that individuals with higher earnings pay a larger percentage of their income in taxes, which helps fund social programs like healthcare, education, and welfare. These programs provide financial support to those in need, improving access to essential services and reducing disparities in wealth. By balancing the tax burden and funding social safety nets, taxation can help reduce the gap between the rich and the poor, promoting greater social equity.