Economy (income redistribution)

Income redistribution

• contrast between rich and poor is unacceptable →

task of the government = ensure social justice through income redistribution policies

• economic benefits =

make the rich pay more ==→== receipts to the poor

                                       ==→== resources used almost entirely for consumption

                                       ==→== more consumption after redistribution (=> more production)

• }}The government cannot eliminate inequality through an income redistribution policy, but it can make it smaller.}}
• }}the government has instruments for redistribution, the most important and most used -> 1) personal income tax and 2) social security}}

1) Personal income tax

• families earn different incomes ==→==(interest and dividends)

                                                        ==→== (houses and lands)

                                                        ==→== professional income from work

                                                        ==→== other incomes

declaration form on paper or online → after checking, the taxes are calculated

• different tax systems

• ^^proportional tax system^^: every taxpayer pays the same tax rate

• progressive tax system: higher taxable income = higher tax rate

              → global progressive: full income at the rate of the highest tax bracket
          → stepped progressive tax system: everyone has the same rate on the same part of their income
  

PROGRESSIVE TAX SYSTEM = REDISTRIBUTIVE

2) Social security

The social security system consists of the ==insurance principle== and the %%solidarity principle%%

==Insurance principle:== the following matters are covered against payment of contribution

→ social risks

→ malady

→ disability

→ anility

%%solidarity principle:%% possible payment to those who need it through a certain contribution

solidarity between → employed and unemployed people

                              → young people and the elderly

                              → healthy and sick people

                              → families with and without children

2.1 two types of benefits

1) replacement income = loss of income from work due to unemployment, retirement and disability

2) additional income = additional costs, raising children, medical expenses, …

2.2 social security service has 7 branches

1) unemployment insurance

2) retirement

3) occupational health insurance

4) family contribution

5) sickness and disability insurance

6) occupational accident insurance

7) yearly holiday

<<the national social security office is the government agency that collects employee and employer contributions and distributes them among the branches.<<