Distribution of income

Question 1

P1(sources)

Answer 1

Gender, Age, Occupation, Background

Question 2

P2 (social effects)

Answer 2

Costs: poverty - increased disease, crime rate, class division + reduced life expectancy
Benefits: happier rich ppl, greater philanthropy

Question 3

P3 (economic effects)

Answer 3

Costs: reduction in total utility, consumption + increase in welfare costs
Benefits: incentive effect, higher savings

Question 4

P4 (fiscal policy - distribution of wealth)

Answer 4

• 2016-17 $500k lifetime non-concessional super cap, tax offset of 500$. Decreased cap
• Limits accumulation of super from HWO: improved DOW. gini: 17-18 had 0.621, 19-20 had 0.611
• 2023-24 first home guarantee scheme increased eligibility for any 2 borrowers
• increased wealth creation for lower quintiles = future improved DOW

Cons: Some argue there is not enough - there is an absence of death duties, inheritance taxes, or specific tax on wealth so government is completely reliant on progress taxes in terms of consistent effort to distribution of wealth

Question 5

P5 (fiscal policy, distribution of income)

Answer 5

• Distribution of Income - Progressive Y tax + Welfare Payment (AUTOMATIC STABILISERS)
• Explain what it is and how it related to DOI. Welfare: 1.9bn Child Care Subsidies, JobSeeker + JobKeeper
• Cons: POLITICAL FACTORS (pressures to appeal to high income voters). Asprey review says that a flat tax would be fairer and this “punishes” high income earners. Also disincentive effect
• Stat: Economist Christian E Weller estimated that if Australia did not have its progressive Y tax and welfare payments the gini coefficient would be 0.1 - 0.01 units higher