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What Is the Redistribution of Wealth?

Malcolm Tatum
Updated May 16, 2024
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The redistribution of wealth is the orderly transfer of assets from one group of entities to a broader range of entities, usually by utilizing some sort of mechanisms put in place by a government. Sometimes known as progressive redistribution, the idea is to allocate available resources in a manner that a wider range of people receive some degree of benefit from those assets. This is often managed by enacting legislation such as taxes or monetary policies that control the movement of commerce and finance within a given nation.

The concept of redistributing wealth is somewhat controversial. One approach holds that the accumulation of assets should be based on the efforts of the individual, with those who work harder receiving a greater share of the available wealth. A different point of view is that all individuals are entitled to an equitable standard of living and while efforts to earn what they can are encouraged, the redistribution of wealth by those who are more fortunate allows those who are not able to generate enough income to achieve that equitable standard to receive some type of assistance. The idea is that when poverty is kept to a minimum, the national economy is more stable and everyone ultimately benefits from that stronger economy.

While methods of managing redistributing wealth vary, there are three basic strategies that are often employed by national governments. The most common approach is through taxation. In the best case scenario, the wealthy are taxed at levels different from those with lesser annual incomes. The end result is that low and middle class households retain more of their earnings for the upkeep of their households, and the tax money received from the wealthy can be used to help fund programs that aid those less fortunate in stretching their limited means to manage such important tasks as funding higher education with the aid of government grants or scholarship programs.

Welfare programs are another common means of achieving a redistribution of wealth. Here, the focus is on allocating funds which provide households with funds that make it possible to enjoy basic amenities that are essential to a basic quality of life. In some cases, this type of program is focused mainly on retirees and citizens who are disabled, although many nations also include welfare programs that assist people working in low-paying jobs that generate under a certain amount of income each month.

A third tool that is often used in the process of redistribution of wealth is nationalization. This is a broad concept that may include strategies such as offering some type of government-funded healthcare to citizens who qualify for the program. As with the other methods, the goal is to ensure that everyone within a given country have access to benefits that are considered essential for a decent standard of living, even if they are not currently able to fund those benefits themselves.

Over the years, the advantages and liabilities of a redistribution of wealth have been hotly debated. At times, this has led to some reforms that helped to tighten restrictions on the process of redistribution, making it more difficult for unscrupulous individuals to take advantage of the system. With most nations continuing to refine how they employ this idea within their specific cultures and setting, the controversy over the redistribution of wealth is likely to continue for many years to come.

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Malcolm Tatum
By Malcolm Tatum
Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing to become a full-time freelance writer. He has contributed articles to a variety of print and online publications, including SmartCapitalMind, and his work has also been featured in poetry collections, devotional anthologies, and newspapers. When not writing, Malcolm enjoys collecting vinyl records, following minor league baseball, and cycling.
Discussion Comments
By Skook — On Nov 27, 2013

I learned about the redistribution of wealth over 50 years ago, back when the only people who were familiar with the phrase were reading Marx and Engels. I explain the concept in basic terms in this true story of my youth. If you read it and pay attention, you can learn the basic concept from the standpoint of a worker at the grass roots level. It is called "Wealth Redistribution for Cowboys."

By anon295600 — On Oct 07, 2012

Why all the anti-success talk? Why can't corporations be allowed to keep more of their profits? They can hire more people (which makes more lives better and they don't have to feed off the other tax payers) and the company is able to give more to charity. Why is being successful after you work 60 or 80 hours a week to make your company profitable being scorned these days?

If you don't like our capitalism here in the U.S., move to some socialist European country and spend your time protesting all day, every day in the streets! Yeah, that sounds like a great life and I am sure your self esteem would be very high as well.

By fify — On Apr 20, 2011

Individual taxes are not the problem for wealth distribution in America. I think its corporate taxes. For the government to have more money for social services and welfare programs, it has to tax. But it should tax corporations much more than it does individuals. Corporations are the ones that have a huge proportion of the wealth. Expecting funds from income tax to redistribute wealth is a bad idea.

By ysmina — On Apr 20, 2011

Redistributing the wealth in the country is really important. To me, it's not just about money and having your needs met, I think it has much bigger effects on the society as a whole. I can name crime as one. I think that poverty and unemployment mainly feed crime. So if wealth was better distributed, crime would probably decrease too.

By candyquilt — On Apr 18, 2011

I read that the top one percent of Americans have half of the nation's wealth. If this is true, that means we are doing a horrible job redistributing wealth in this country.

In Sweden, for example, the top one percent are said to have about 36% of the wealth. That is definitely a much better picture. I think European countries have better income equality, so maybe that's the reason.

I think that most Americans would want there to be a better redistribution of wealth in America. But every time there is a newly proposed higher tax rate for the wealthy, there is some opposition.

Malcolm Tatum
Malcolm Tatum
Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing...
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