The income inequality and its effects

    Statistics: The richest 1 percent of the world's population has access to nearly 14 percent of global income, while 20 percent of the poorest people are getting on the 1 percent only.

   The main economic challenge in our century is to decrease the immense gap in the incomes between people in the same country, and insure the most possible of transparency in the redistribution of wealth. All the disposable ways and procedures for achieving that goal are working within partial efficiency, which means that the inequality of income is a big problem in every country not only in the economic aspect; but also social and ethical sides in society as well. In many economies, the fiscal policy is used to maintain the financial system for supporting the economic efficiency (e.g: to reduce the tax evasion or cutting unproductive expenditures), then to spend these revenues more equitably.

   “Many policy makers view a more equal income distribution as a desirable goal, although the underlying motivations may differ. Lower income inequality is often viewed as important for achieving greater equality of opportunities to access economic, social, and political resources.”

   A lot of economists say that this inequality is useful for the economic growth, but today they believe by the contrast of that. Because of many social and ethical advantages coming by reducing the inequality affect positively on the economy. And the most used measure (to show what happen in fiscal policy and to measure its trend in every country) is GINI coefficient (from 0 “absolute equality” to 1 “complete inequality”). “The failure to redistribute income may also reflect a political reality, but it can be limited through more of conscious government policies.”

   Disposable Solutions: Fiscal policy has played a significant role in reducing income inequality in advanced economies, especially in economies with high initial pre-tax and transfer inequality.

   The government’s fiscal policies were a logical reaction to reduce the income inequality over time, especially in the advanced economies through direct taxes (like the income taxes) and indirect (like the expenditure on the education and healthcare or public pensions) to reach a positive points in contributing of growth of economy. And the studies viewed that many countries achieved a substantive progress in decreasing the inequality, but these policies weren’t efficient enough in longer-term.

   “Some economists said that the pursuing the equality can reduce the efficiency and the incentive to work and incest.” Furthermore; “the poor will not receive all the money that is taken from the rich.”

    I copy the same example I found in interesting article about this matter, when the tide is rising, it lifts all boats and helps whether the big and small boats in the port. Where the focusing is only on the small boats can lead to indirect help for all equally. In other way; the government subsidy (financial support) must be oriented to serve the fragile classes in society by projection on them in assigned methods guarantee the proper channel until the targeted people.

   “Still, there may be some win-win policies, such as better-targeted subsidies, better access to education for the poor that improves equality of economic opportunity, and active labour market measures that promote employment.”