Income

Question 1

Define income.

Answer 1

A flow of money into an account. “monies received by an individual over a specified time period (a year)”

• wages
• rent money received
• shares

Question 2

How to define income

Answer 2

1. Earned (active) income is money received for doing something (like paid employment).
2. Unearned (passive) income from investments, dividends from stocks and shares, rents, benefits.
3. Disposable income: The amount left after taxes
4. Discretionary income: amount available to spend once essential items (food, clothing, transport shelter)
5. Household income: combined incomes of all people sharing a household. It includes every form of income, e.g. salaries and wages, retirement income, near cash government transfers like food stamps, and investment gains.

Question 3

How to measure income?

Answer 3

*income tax

• some groups can hide their real income tax
• wealthy can mask their tax by employing accountants to find legal ways of minimising their income.
• self employed people don’t declare all their income to tax authorities. (the hidden economy)

Question 4

Income divide facts.

Answer 4

~ total household income of the UK= £900bn
~ the richest 1% takes home 150x the amount of poorest 1% per year
~ social mobility is decreasing with time