What Is Wealth Redistribution?
Wealth redistribution refers to government policies that move resources from higher-income or wealthier households to lower-income households. In the United States, this happens primarily through taxes and public transfers, such as Social Security and refundable tax credits.
How the U.S. Redistributes Income and Wealth
The federal tax system uses progressive income taxes, payroll taxes, and estate taxes to reduce inequality. Government programs then provide cash benefits, healthcare, and housing assistance. According to the Congressional Budget Office, these policies significantly reduce income inequality after taxes and transfers https://www.cbo.gov/topics/income-and-wealth/income-inequality.
Key Outcomes and Data
Despite transfers and taxes, the U.S. still has high levels of wealth concentration. The Federal Reserve reports that the top 10% of families hold a large share of total household wealth, while the bottom 50% hold a much smaller share. Ongoing policy debates focus on how to adjust tax rates, benefits, and programs to further influence the distribution of wealth.
