Income redistribution

Income redistribution is the transfer of income among people or groups through taxes, benefits, wages, or public services. It changes how income is allocated before or after market transactions.

Progressive tax: A tax system in which the tax rate rises as the taxable amount increases. Higher rates on higher incomes can finance transfers and services for lower-income groups.
Market income: Income received from wages, self-employment, investments, and other private economic activity before taxes and transfers. It provides the pre-policy baseline against which redistribution is measured.
Equality of opportunity: The principle that people should have comparable prospects independent of circumstances beyond their control. It prioritizes fair starting chances, which can differ from equalizing incomes themselves.
Poverty: A condition in which people lack resources to meet basic needs or achieve an adequate standard of living. Income transfers can reduce poverty by raising resources available to low-income households.
Means-tested benefit: A public benefit whose eligibility or amount depends on a recipient’s income or assets. Tying aid to economic need directs transfers toward people with lower resources.
Disposable income: Income remaining after direct taxes and cash transfers are accounted for. Changes in disposable income show the immediate household effect of many redistribution policies.
Equality of outcome: The principle that people should receive similar outcomes, such as income or material resources. It makes the reduction of income differences a more direct policy aim.
Labor supply: The amount of time and effort people are willing and able to devote to paid work. Taxes and benefits can alter the financial incentives to enter work or increase hours.
Universal basic income: A recurring cash payment made to individuals without a means test or work requirement. It illustrates redistribution through regular, broadly distributed cash payments.
Income inequality: The uneven distribution of income among individuals or households in a population. Redistributive policies are often evaluated by whether they narrow income differences.

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