The redistribution of wealth and its practical application are bound to change with the continuous evolution of social norms, politics, and culture. Within developed countries income inequality has become a widely popular issue that has dominated the debate stage for the past few years. The importance of a nation's ability to redistribute wealth in order to implement social welfare programs, maintain public goods, and drive economic development has brought various conversations to the political arena. A country's means of redistributing wealth comes from the implementation of a carefully thought out well described system of taxation. The implementation of such a system would aid in achieving the desired social and economic objective of diminishing social inequality and maximizing social welfare. There are various ways to impose a tax system that will help create a more efficient allocation of resources, in particular, many democratic, even socialist governments utilize a progressive system of taxation to achieve a certain level of income redistribution. In addition to the creation and implementation of these tax systems, "globalization of the world economy [has] provided incentives for reforming the tax systems" across the globe. Along with utilizing a system of taxation to achieve the redistribution of wealth, the same socio-economic benefit can be achieved if there are appropriate policies enacted within a current political infrastructure that addresses these issues. Modern thinking towards the topic of the redistribution of wealth, focuses on the concept that economic development increases the
standard of living across an entire society. Today, income redistribution occurs in some form in most
democratic countries, through economic policies. Some redistributive policies attempt to take wealth, income, and other resources from the "haves" and give them to the "have-nots", but many redistributions go elsewhere. Furthermore, redistribution is discussed in the realm of
sustainability science, sometimes even considered as a fundamental
sustainability strategy. Scholars such as Iris Borowy argue that ‘some form of absolute international redistribution’ is necessary, ‘in which the rich experience an actual reduction in their material income and wealth, the newly emerging societies accept stagnating levels while those at the bottom improve their standards’. However, such large scale international redistribution for purposes of sustainability cannot yet be observed. In a
progressive income tax system, a high income earner will pay a higher tax rate (a larger percentage of their income) than a low income earner; and therefore, will pay more total dollars per person. Other taxation-based methods of redistributing income are the
negative income tax for very low income earners and
tax loopholes (tax avoidance) for the better-off.
Government redistribution Two other common types of governmental redistribution of income are
subsidies and
vouchers (such as
food stamps or
Section-8 housing vouchers). These
transfer payment programs are funded through general taxation, but benefit the poor or influential special interest groups and corporations. While the persons receiving transfers from such programs may prefer to be directly given cash, these programs may be more palatable to society than cash assistance, as they give society some measure of control over how the funds are spent.
Benefit redistribution 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. Medicare is a government-run health insurance program that covers people age 65 or older, certain younger people with disabilities, and people with
end-stage renal disease (permanent kidney failure requiring dialysis or a transplant, sometimes called ESRD). This is a direct benefit program because the government is directly providing health insurance for those who qualify.
Gini Index 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.
Property redistribution Wealth redistribution can be implemented through
land reform that transfers ownership of land from one category of people to another, or through
inheritance taxes,
land value taxes or a broader
wealth tax on assets in general. Before-and-after Gini coefficients for the
distribution of wealth can be compared. Interventions like rent control can impose large costs. Some alternative forms of interventions, such as housing subsidies, may achieve comparable distributional objectives at less cost. If the government cannot costlessly redistribute, it should look for efficient ways of redistributing—that is, ways that reduce the costs as much as possible. This is one of the main concerns of the branch of economics called the economics of the public sector.
Middle class One study suggests that "the middle class faces a paradoxical status" in that they tend to vote against income redistribution, even though they would in some cases benefit from it. ==Objectives==