Income Distribution Essay Sample

Benefits of income distribution to the economy and society.

Distribution of income refers to the impartiality with which income is distributed equally among the members of the society. Distribution of income is beneficial in that, it motivates people to work harder so as to earn more. This in turn leads to the people getting more involved in nation building activities which helps to boost economic development. Income distribution also helps reduce crime rates in the society as people are more concerned with increasing their income other than involvement in petty crime. With the incentive of higher pay, workers are more willing to put more effort so as to gain more.

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Distribution of income as a cost to our economy and society.

Despite the current distribution of economy coming in handy for the needy, it comes at a cost for the economy and society too. With a vast majority of people retiring and receiving social security funds, soon there will not be any retirement funds to give the retirees. This spells danger for the young working people once they reach retirement age. Despite the income distribution, there are families out there that cannot meet the basic requirements. This leads to more dependency on the government and these people no longer pursue jobs but live off the hard work of other people.

The federal government and distribution of income.

The federal government has a role to play in influencing the distribution of income. It is the government's responsibility to provide the people with a more balanced distribution and the solution is not in new tax plans or social programs. With a little redistribution here and there, the federal government can make a leap forward on this. If the minimum wage allowed people to live above the poverty line and access basic needs then the dependency on government aid would be reduced significantly.

Primary uncertainty and risk of federal government's attempt on influencing current distribution of income.

The federal government's choice to influence the present distribution of income or not has one major uncertainty. There have not been many initiatives to fix uneven distribution. The outcome of this is therefore uncertain together with the effects it will bear on the society. The risk comes in when the government tries to take away money from those with plenty of it to give it to those without. Trying to execute this would be a risky move as the people wouldn't take it kindly with their hard-earned money being taken away from them in an attempt to achieve equality.

Benefit, cost, risk, uncertainty of the changes.

From figure 4.6, it is easy to tell that the level of inequality in this country is just extreme. The top 20% of the society have over 50% of the nation's income while the rest is distributed among the remaining 80%. As observed the distribution is not fair at all. However, with a few adjustments and changes, improvements can be made. For instance, I would start with imposing tax policies based on the individual's income. The 20% earning half of the nation's income should be taxed more so as to cater for the short comings of the remaining 80% making less. Educating the lower percentile would also go a long way in equipping them with skills that would be essential for them in securing a decent income.

However, given that the top 20% are the people running the government, it remains uncertain as to whether the above changes would be embraced or kicked out. We can't know unless we try.