Redistribution of income and wealth

Redistribution of income and wealth is the transfer of income and wealth (including physical property) from some individuals to others through a social mechanism such as taxation, welfare, public services, land reform, monetary policies, confiscation, divorce or tort law.[1] The term typically refers to redistribution on an economy-wide basis rather than between selected individuals.

Interpretations of the phrase vary, depending on personal perspectives, political ideologies and the selective use of statistics.[2] It is frequently used in politics, to refer to perceived redistribution from those who have more to those who have less.

Occasionally, albeit rarely, the term is used to describe laws or policies that cause redistribution in the opposite direction, from the poor to the rich.[3]

The phrase is sometimes related to the term class warfare, where the redistribution is alleged to counteract harm caused by high-income earners and the wealthy through means such as unfairness and discrimination.[4]

Redistribution tax policy should not be confused with predistribution policies. "Predistribution" is the idea that the state should try to prevent inequalities from occurring in the first place rather than through the tax and benefits system once they have occurred. For example, a government predistribution policy might require employers to pay all employees a living wage and not just a minimum wage, as a "bottom-up" response to widespread income inequalities or high poverty rates.

Many alternate taxation proposals have been floated without the political will to alter the status quo. One example is the proposed "Buffett Rule", which is a hybrid taxation model composed of opposing systems intended to minimize the favoritism of special interests in tax design.

The effects of a redistributive system are actively debated on ethical and economic grounds. The subject includes an analysis of its rationales, objectives, means, and policy effectiveness.[5][6]

  1. ^ "Redistribution". Stanford Encyclopedia of Philosophy. Stanford University. 2 July 2004. Retrieved 13 August 2010. The social mechanism, such as a change in tax laws, monetary policies, or tort law, that engenders the redistribution of goods among these subjects
  2. ^ Kessler, Glenn. "Fact Checker: Elizabeth Warren's claim that the bottom 90 percent got 'zero percent' of wage growth after Reagan". Washington Post. Retrieved 7 May 2017.
  3. ^ Reich, Robert (4 May 2017). "Trump's Stock in Trade is Cruelty. Count the ways". Newsweek. Retrieved 7 May 2017.
  4. ^ FAIR (July 2009). "For Media, 'Class War' Has Wealthy Victims, Rich getting richer seldom labeled as belligerents". Retrieved 8 May 2017.
  5. ^ F.A. Cowell ([1987] 2008). "redistribution of income and wealth," The New Palgrave Dictionary of Economics, 2nd Edition, TOC.
  6. ^ Rugaber, Christopher S.; Boak, Josh (27 January 2014). "Wealth gap: A guide to what it is, why it matters". AP News. Retrieved 27 January 2014.

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