Income redistribution

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(Redirected from Redistribution of wealth)

Income redistribution, or the redistribution of wealth, is a political policy usually promoted by members of the political left, and opposed, or less strongly supported, by members of the political right. The basic premise of the redistribution of wealth is that money should be more equally distributed so it benefits all members of society, and that the rich should be obliged to assist the poor. Thus, money should be redistributed from the rich to the poor, creating a more financially egalitarian society. Often, proponents of redistribution argue that the rich are exploiting the poor or otherwise gaining unfair benefits, and therefore redistributive practices are necessary in order to redress the balance.

Today, income redistribution occurs in some form in most liberal democracies, most commonly through progressive taxation (under which the amount of tax paid is directly related to one's income), some of which goes to fund welfare programs to assist the poor.

Opponents of redistribution argue that it punishes good economic activity whilst rewarding poor economic activity, resulting in an inefficient economy, or that it infringes on one's right to enjoy the fruit of one's labor. They also argue that it will result in a brain drain and lead to a state where the middle class have to support a large population of unemployed with an ever-increasing percentage of their income, because, it is argued, a slowdown in economic activity will result in higher taxes unless spending is curtailed. Others argue that in practice redistribution widens the gap between the rich and the poor.

Proponents of income redistribution argue that capitalism does not inherently distribute wealth fairly, but that the rich receiving more than they deserve. For example the three richest people in the world possess more financial assets than the poorest 10% of the world's population (that is, the poorest 600 million people) combined. They also argue that economic inequality contributes to crime, and potentially revolution (which it is in the interest of the rich to prevent). There is also the issue of equal opportunity. Children are clearly not responsible for the wealth of their parents, and yet the state often provides greater benefits and better education for the children of the rich than for the children of the poor. Also the law of diminishing returns is cited, with the interpretation that the loss to the wealthy in the form of taxation is proportionately less than the gain to the poor from social programs. Adam Smith, the father of capitalism, wrote that the cost of government must be borne by those best able to afford it. Finally, it is argued that the rich should pay higher taxes because they receive greater benefits from the protection of the government.

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