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Concept
Redistribution of income and wealth
Summary
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. 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. It is frequently used in politics, to refer to perceived redistribution from those who have more to those who have less.
Occasionally, however, the term is used to describe laws or policies that cause redistribution in the opposite direction, from the poor to the rich.
The phrase is often coupled with the term class warfare, with high-income earners and the wealthy portrayed as victims of unfairness and discrimination.
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.
In ancient times, redistribution operated as a palace economy.
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