Redistribution of Wealth

The phrase redistribution of wealth commonly refers to government policies that are intended to increase the income or benefits of poor people using money raised by general taxation of the rich, the prosperous, and the middle classes. Sometimes the debate is limited only to the redistribution of income, but generally any policy intended to benefit the poor, whether in the form of income or services, can be considered an attempt to redistribute the wealth. The ethical debate about redistribution is usually framed as a conflict between egalitarian proponents of redistribution, who claim that society has a collective moral responsibility to look after the poor, and libertarian critics, who see such transfers as an unethical violation of the property rights of those who pay the taxes.

Social classes vary greatly in different countries. This affects the redistribution debate as the current distribution determines the extent and type of poverty and wealth. The debate is sometimes framed in terms of the origin of people's incomes such that the rich are those with substantial investment income, the middle class are those with sufficient salary or wage income to be above the poverty line, and the poor have insufficient income of any sort or depend on government or charity. However, much of the debate, especially with respect to developed countries, uses deciles and quintiles (dividing the population by income into 10 or 5 groups, respectively) for convenience. Generally, the rich are the top 10%, the prosperous the rest of the top 20%, the middle class is the middle 60%, and the poor are the bottom 20% (or sometimes the bottom 10%).

Although the redistribution debate is primarily about government programs that intend to benefit the poor, there are many other government programs that redistribute wealth to the middle class and even to the rich. For example, those prosperous enough to have investments benefit most directly from government subsidies, bailouts (especially of hedge funds), and corporate tax exemptions. Old-age security, government support for postsecondary education, and even road budgets greatly benefit middle-class people.

Government programs that are targeted specifically toward the poor, often referred to as “social welfare programs,” are specifically meant to have a redistributive effect. It is the ethics of these programs that are usually addressed in discussions of redistributing wealth. The key ethical positions in this debate are libertarianism, egalitarianism, objections against the extremes of poverty or wealth, and efficiency.

The libertarian argument is that social welfare programs are unethical because they involve taxing some people solely for the purpose of giving the money to others. This violates taxpayers' rights to their property and income. The libertarian position can also be defended on the grounds that it promotes freedom, minimizes government power, supports the morality of free markets, and rewards virtues such as hard work, ambition, skills, and risk taking (at least in those societies in which wealth does not come from crime and corruption).

Libertarianism can be criticized for its assumption that current property ownership and income are morally just. Libertarians morally privilege the current distribution of wealth, often without giving adequate justification. Furthermore, libertarianism assumes that all income should be private and that there should be no social income from community ownership of natural resources, taxes on social capital, or other sources. In defense of libertarians, they are often consistent in that they oppose not only social welfare programs but also all other government programs except security and defense.

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