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Redistribution of income and wealth


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. The term typically refers to redistribution on an economy-wide basis rather than between selected individuals, and it always refers to redistributions from those who have more to those who have less.

Redistribution tax policy should not be confused with predistribution of wealth, where the lower and middle classes pay higher net effective tax percentage rates, as the elite pay regressive tax rates. Itemized deductions, often called tax loopholes, tend to perpetuate predistribution preferences in lieu of implementing a neutral tax system, such as a flat tax. Many alternate taxation proposals have been floated without the political will to alter the status quo. The proposed "Buffett Rule" is a hybrid taxation model, a compromise of opposing systems, intended to minimize the favoritism of the special interest tax design.

The effects of a redistribution system are actively debated on ethical and economic grounds. The subject includes analysis of its rationales, objectives, means, and policy effectiveness. A 2003 survey among 264 members of the American Economic Association found that 71.2% of them support redistribution, while 20.4% oppose it, and 7.2% had mixed feelings.

In ancient times, redistribution operated as a palace economy. These economies were centrally based around the administration, so the dictator or pharaoh had both the ability and the right to say who was taxed and who got special treatment.

Another early form of wealth redistribution occurred in Plymouth Colony under the leadership of William Bradford. Bradford records in his diary that this "common course" bred confusion, discontent, distrust, and the colonists looked upon it as a form of slavery.


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