Wealth is different from household income, which measures the annual inflow of wages, interests, profits and other sources of earnings. The data have also shown a growing gap in wealth along racial and ethnic lines since the recession ended. In our analysis, we categorized families by their household income, after we adjusted their incomes for family size. Middle-income families are families whose size-adjusted income is between two-thirds and twice the median size-adjusted income.
History[ edit ] In ancient times, redistribution operated as a palace economy. Another early form of wealth redistribution occurred in Plymouth Colony under the leadership of William Bradford. Free-market capitalist economies tend to feature high degrees of income redistribution.
However, Japan's government engages in much less redistribution because its initial wage distribution is much more equal than Western economies.
Likewise, the socialist planned economies of the former Soviet Union and Eastern bloc featured very little income redistribution because private capital and land income — the major drivers of income inequality in capitalist systems — was virtually nonexistent; and because the wage rates were set by the government in these economies.
In his article Redistribution,  Dwight R. Instead, government takes from the relatively unorganized e. The most important factor in determining the pattern of redistribution appears to be political influence, not poverty.
Another way is by restricting competition among producers. The inevitable consequence—indeed, the intended consequence—of these restrictions is to enrich organized groups of producers at the expense of consumers.
Here, the transfers are more perverse than with Medicare and Social Security. They help relatively wealthy producers at the expense of relatively poor and, in some cases, absolutely poor consumers.
Many government restrictions on agricultural production, for example, allow farmers to capture billions of consumer dollars through higher food prices see agricultural subsidy programs. Most of these dollars go to relatively few large farms, whose owners are far wealthier than the average taxpayer and consumer or the average farmer.
Two other common types of governmental redistribution of income are subsidies and vouchers such as food stamps. These transfer payment programs are funded through general taxation, but benefit the poor or influential special interest groups and corporations.
Social Security program redistributes income from the rich to the poor, but the majority of those receiving Social Security earned their benefits through tax withholding from their paychecks or quarterly income statements, and most benefits are indexed to the actual earning levels of individual workers.
Only the highest- and lowest-income workers fall outside normal rates. Contrary to popular belief, a recent study  found that, overall, the Social Security System was slightly regressive against the poor and not redistributive, once important factors were taken into account for example, the longer life expectancy of the wealthy when compared to the poor gives them more years to collect benefits.
Governmental redistribution of income may include a direct benefit program involving either cash transfers or the purchase of specific services for an individual.
Medicare is one example. This is a direct benefit program because the government is directly providing health insurance for those who qualify.
The difference between the Gini index for the income distribution before taxation and the Gini index after taxation is an indicator for the effects of such taxation. Before-and-after Gini coefficients for the distribution of wealth can be compared. Objectives[ edit ] The objectives of income redistribution are to increase economic stability and opportunity for the less wealthy members of society and thus usually include the funding of public services.
One basis for redistribution is the concept of distributive justicewhose premise is that money and resources ought to be distributed in such a way as to lead to a socially justand possibly more financially egalitariansociety.
Another argument is that a larger middle class benefits an economy by enabling more people to be consumerswhile providing equal opportunities for individuals to reach a better standard of living.
Seen for example in the work of John Rawls ,[ citation needed ] another argument is that a truly fair society would be organized in a manner benefiting the least advantaged, and any inequality would be permissible only to the extent that it benefits the least advantaged. Some proponents of redistribution argue that capitalism results in an externality that creates unequal wealth distribution.
This view was associated with the underconsumptionism school in the 19th century, now considered an aspect of some schools of Keynesian economics ; it has also been advanced, for different reasons, by Marxian economics.Redistribution of income and redistribution of wealth are respectively the transfer of income and of wealth (including physical property) from some individuals to others by means of a social mechanism such as taxation, charity, welfare, public services, land reform, monetary policies, confiscation, divorce or tort law.
In addition, wealth is unevenly distributed, with the wealthiest 25% of US households owning 87% of the wealth in the United States, which was $ trillion in U.S.
household and non-profit organization net worth rose from $ trillion in Q1 to a pre-recession peak of $ trillion in Q3 Sep 28, · The United States has a long history of redistribution of wealth for the social good, and the real debate about it needs to focus on the levels at which it should kick in, an economist writes.
The first is to ignore its effects on the distribution of income or wealth, and argue that policymakers should shoot for efficiency and worry about redistribution later. The distribution of wealth is a comparison of the wealth of various members or groups in a barnweddingvt.com shows one aspect of economic heterogeneity..
The distribution of wealth differs from the income distribution in that it looks at the economic distribution of ownership of the assets in a society, rather than the current income of members of that . Compared to other industrialized countries, the United States _____ in providing a safety net for all its citizens and in lifting a greater percentage of the poor above the poverty line with various programs.