fig Inequality and the Redistribution of Income

fig Ratio of income shares of bottom 40% to top 20% of households (after taxes and benefits)

fig Size distribution of UK income by quintile group of households: 2000/1 Size distribution of UK income by quintile group of households: 2000/1 Bottom 20% Next 20% Middle 20% Next 20% Top 20% 15% 25% 51% 7% 2% Income before taxes and benefits

fig Size distribution of UK income by quintile group of households: 2000/1 Size distribution of UK income by quintile group of households: 2000/1 Bottom 20% Next 20% Middle 20% Next 20% Top 20% 15% 25% 51% 7% 2% Bottom 20% Next 20% Middle 20% Next 20% Top 20% 11% 16% 22% 45% 6% Income before taxes and benefits Income after taxes and benefits

fig Percentage shares of income before and after tax by decile group of households: 2000/1 Percentage shares of income before and after tax by decile group of households: 2000/1 % of income Source: Economic Trends (ONS, April 2002)

fig Percentage shares of income before and after tax by decile group of households: 2000/1 Percentage shares of income before and after tax by decile group of households: 2000/1 % of income Source: Economic Trends (ONS, April 2002)

INEQUALITY AND POVERTY Distribution in the UK –size distribution –functional by source

fig Sources of UK household income as a percentage of gross household income Sources of UK household income as a percentage of gross household income % 77% 6% 4% 2% 10% Wages and salaries Income from self employment Investment income Pensions, annuitiesSocial security benefits Other Source: Family Spending (ONS, 2002)

fig Sources of UK household income as a percentage of gross household income Sources of UK household income as a percentage of gross household income /1 67% 9% 4% 7% 12% 1% 77% 6% 4% 2% 10% Wages and salaries Income from self employment Investment income Pensions, annuitiesSocial security benefits Other Source: Family Spending (ONS, 2002)

fig Average gross weekly earnings of UK full-time adult male employees: 2001 Average gross weekly earnings of UK full-time adult male employees: 2001

fig Weekly income for different types of UK households: 2000/1 Source: Family spending (ONS,2002) One adult (not retired) One adult, two or more children One man, one woman (not retired) Two adults, four or more children

fig Weekly income for different types of UK households: 2000/1 Source: Family spending (ONS,2002) One adult (not retired) One adult, two or more children One man, one woman (not retired) Two adults, four or more children

fig Average gross weekly earnings of UK full-time adult female employees: 2001 Average gross weekly earnings of UK full-time adult female employees: 2001

fig Average gross weekly earnings of UK full-time adult employees: 2001 Average gross weekly earnings of UK full-time adult employees: 2001

fig Gross weekly household income: Selected UK regions: 2000/1 Gross weekly household income: Selected UK regions: 2000/1 Source: Family spending (ONS,2002) North-East N. Ireland West Midlands Scotland South-East London UK (average)

fig Composition of UK wealth 1971 Stocks and shares Notes, coin and deposits with banks, etc. Tenancy rights Other fixed assets Dwellings (net of mortgage debt) Life assurance and pension funds 26% 15% 23% 7% 12% 23% Other financial assets (net of liabilities) – 6%

fig Composition of UK wealth Stocks and shares Notes, coin and deposits with banks, etc. Tenancy rights Other fixed assets Dwellings (net of mortgage debt) Life assurance and pension funds 35% 16% 26% 15% 14% 5% 3% 26% 23% 7% 12% 23% Other financial assets (net of liabilities) – 6% 1%

The causes of inequality –inequality of wealth –differences in workers’ ability; qualifications attitudes hours worked economic power qualifications –differences in demand for goods –differences in household composition –discrimination –degree of government support –unemployment Government attitudes towards inequality INEQUALITY AND POVERTY

Inequality and the Redistribution of Income Taxes and Benefits

Role of taxes and benefits –redistribution of income –achievement of social efficiency –macroeconomic management Requirements of a good tax system Types of tax –direct taxes –indirect taxes TAXES AND BENEFITS

Balance of taxation in different countries

Taxes and the redistribution of income –progressive taxes –regressive taxes (including lump-sum taxes) –proportional taxes TAXES AND BENEFITS

fig O Total tax paid (T) Total income (Y) Proportional Regressive Lump-sum Progressive Different types of tax: (a) total tax paid

fig O Total income (Y) Proportional Progressive Regressive Lump-sum Average tax paid (T/Y) Different types of tax: (b) average tax paid