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Fig. 167 Redistribution-of-income principle of taxation. The personal distribution of original and final income in the UK, 2002. Final income = original income less taxes paid, plus state spending on education, health, social security benefits. Source: Social Trends, 2004.
redistribution-of-income principle of taxation
the principle that the TAXATION system, together with the provision of state welfare programmes, should be used to benefit poorer households at the expense of richer households. Fig. 167 shows the extent of income redistribution brought about by taxation and state spending. Thus, the poorest 20% of the population receive only 3% of total original income, but after taxation and state benefits they receive 10% of total final income. See also PROGRESSIVE TAXATION, ABILITY-TO-PAY PRINCIPLE OF TAXATION, POVERTY.Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005