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The Relationship Between Income Distribution and Equity

by gbaf mag

Income redistribution is all about helping the less fortunate and well off. It is a process of giving back to those who have suffered need and hardship more than your average person. There are many ways to define what is income redistribution. In this article I will focus on how it relates to welfare programs. If you look around at society today, welfare is a huge concept. We live in a very socialist-socialist nation where corporations and government are breeding together.

Income redistribution is about helping the less fortunate and those who work hard for it. This concept is a bit more complicated than just providing food, shelter and clothing. There are many ways to provide for these needs. The basic idea behind income redistribution is that some people should not have to suffer so that others can have what they need. For instance, let us look at the United States federal social programs. These include things like Medicare, Medicaid, Social Security, Social Services, Temporary Assistance for Needy Families (TANF) and some even like the Federal Work Program (FMW).

The transfer payments to these taxpaying citizens go to them based on their income. These programs were established to help relieve the plight of taxpaying Americans. Those who are willing to work in the U.S., but are poor (at least financially), receive assistance from the government in the form of welfare programs.

Health Equity is another important component of what is income redistribution. Health equity simply refers to the difference between what a typical person (who may be rich or poor) pays in premiums for a health plan vs. what the same person would pay if he or she were working in a less expensive health care setting. In addition to health care, other types of healthcare inequality also exist. For example, those who suffer from disabilities or live in areas where there are not enough resources for proper nutrition can receive special benefits through programs like Medicaid.

How can income redistribution affect you? It can affect you directly – through your taxes. When the U.S. states the value of their social welfare programs in dollars to each citizen, they are legally obligated to give each citizen a certain amount of money as a tax credit. The tax credit itself can either be an improved rate of taxation of income (that is provided by state governments) or to simply improve equity in public health systems.

In addition to taxes, the social transfers themselves can affect how well the U.S. manages its economic system. In the aforementioned example of Medicaid, this program is designed to prevent (and even alleviate) the consequences of a medical emergency. However, how do income redistribution and the associated equity play into the equation? The fact that Medicaid is provided through a universal health care program means that those who need it are given priority. Also, the fact that there are federal, state, and local social transfers that are channeled through these programs, the relatively inefficient distribution of these programs can be rectified.

Thus, income redistribution is important not only because it improves equity across income groups, but also because it improves the efficiency of the distribution of resources. This allows us to address issues concerning increasing health equity (reducing inequities in primary health care), raising the living standards of the disadvantaged, reducing poverty, and improving overall productivity. Of course, income redistribution is not the only way to address such issues. Still, it is probably the most promising avenue of approach.

There are many ways in which we can improve the efficiency of our health system and address the problem of health equity. However, the relationship between income redistribution and equity is clear. When we look at how health equity is distributed in society, it becomes apparent that the inefficient distribution of funds is a major impediment to the efficiency of the system. Redistributing the money is one way to correct that problem.

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