4. Redistributive philosophies and Incentives Consider a society consisting of two people, Sam earns an income of $85.000 per year and Teresa eams an income of $30,000 per year. The government is considering a redistribution plan that would impose a 25% tax on Sam's income and give the revenus to Teresa without any incentive distortion, Sam would retain $63,750 and Teresa would end up wah 51,250. However, let us assume that since Sam will not receive all the income he earns, he decides to work less and earn an income of only $75,000, of which 254 x 575,000 = $18.750 will be owed in taxes with the redistribution plan, Sam will take home an income of 5 The $18,750 that Sam pays in taxes will be transferred by the government to Teresa. Let us assume that since Teresa now receives payment from the government, she will not work as many hours and will eam an income from work of only $29,000 instead of her initial 530,000 with the redistribution plan, Teresa's total income (including the government payment received) is now After the redistribution plan is implemented, total income in this society total income in this society. Without a redistribution plan, total income in this society is S iss Therefore, the redistribution plan than it hurts Sam, Which of the According to the utilitarian political philosophy, the $18,750 transferred from Sam to Teresa will benefit Teresa following statements is true according to this philosophy? The government should not institute the plan because it has no right to take money from one person and give to another The government should definitely institute the plan because it will increase overall utility The redistribution may or may not be desirable, depending on the relative magnitude of the wolltygalo and the efficiency loss