Poverty Flashcards
Poverty
The state of being poor and not having enough money or income to meet basic needs.
Absolute poverty
The situation where individuals do not have access to basic requirements of life e.g. water, food, shelter and more. Less than 2$ a day
Relative poverty
A situation where individuals are excluded from being able to take part in what are considered the normal, acceptable standards of living in society. Income below 60% of the median
Relative vs absolute poverty
Absolute poverty is more of a national phenomenon whereas relative poverty is more connected with inequalities in wealth and income distribution.
Causes of poverty in the UK
-Old age
-Unemployment
-Low wages
-Educational and health disadvantages
-Poor communities
Redistribution of income after taxes and benefits
Before taxes and benefits, the richest 20% had an income 15x greater that the poorest 20%. After it was 4x greater.
Cash benefits
-Universal child benefits
-State pensions
-Conditional benefits
Benefits in kind
-Education
-Healthcare (NHS)
-Social housing
-Employment training
Problems with taxation systems-Fiscal drag
When raises in tax thresholds in progressive tax systems do not keep pace with inflation. Often tax thresholds arent linked to the inflation rate. If the tax threshold doesnt increase, you are paying a higher proportion of tax and so becoming relatively poorer
Problems with taxation systems-Poverty trap
Where working more results in little or no increase in net income. It occurs when a persons income level means they become eligible to pay tax but ineligible for means tested benefits.
