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fiscal policy

What is redistribution?

Tom Waters of the Institute for Fiscal Studies looks at income redistribution and how this may vary across an individual’s lifetime

Should the better off contribute to the income of poorer households?

Redistribution is when the government takes money from some people and gives it to others. A large part of redistribution is done through taxes and benefits. Each year, the UK government takes over £400 billion in taxes on personal income and VAT alone, and spends over £200 billion on benefits.

Income taxes are progressive, in the sense that the proportion of your income that you pay in taxation increases as your income increases. And much of the working-age benefit system is means-tested — benefit entitlement depends on income, with those on lower incomes tending to have greater entitlements than those on higher incomes.

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