Monetary redistribution significantly reduces income inequality

2023-11-29 13:00:00

Dn its report “France, social portrait, 2023 edition”, INSEE measured the impact of the redistributive system on the distribution of wealth and income inequalities. Before monetary redistribution, that is to say before payment of social benefits and payment of taxes and contributions, the average annual standard of living of the 20% of the richest people was in 2022 67,100 euros, compared to 8,450 euros for the lowest 20%, i.e. 7.9 times less. This ratio was reduced to 3.9 following redistribution, which increased the average standard of living of the poorest 20% by 59% and reduced that of the wealthiest 20% by 22%.

The reduction in gaps is even greater at the ends of the income scale: before redistribution, the poorest 10% of people have an average annual standard of living of 4,500 euros, compared to 87,610 euros for the 10%. the wealthiest, i.e. 19.5 times more. After redistribution, this ratio is reduced to 5.6, with 65,050 euros of income for the richest 10% and 11,620 euros for the poorest 10%.

Taxes and social benefits

In detail, the 10% wealthiest people were subject to an average of 22,810 euros in deductions in 2022, including 13,220 euros in direct taxes (12,640 euros for income tax) and have contributed €9,590 to the financing of social protection in the form of contributions. They also received 240 euros in benefits, including 110 euros in family benefits.

At the other end, the amount of direct deductions for the poorest 10% of people averaged 270 euros in 2022: 280 euros of contributions and social security contributions and ten euros of tax credits. On the other hand, they received 7,380 euros in social benefits distributed as follows: 3,570 euros in activity bonus and minimum social benefits, 1,840 euros in family benefits, 1,830 euros in housing assistance, 90 euros in exceptional back-to-school bonus and 50 euros inflation bonus.

In total, according to INSEE, income tax contributed 31% in 2022 to the reduction in inequalities in living standards while social benefits contributed 60%: 13% for social assistance. housing, 20% for family benefits and 27% for social minima and activity bonus.

1701302810
#Monetary #redistribution #significantly #reduces #income #inequality