The Relationship Between Income Equity and Health Equity

Income distribution refers to the system by which an individual’s total income is distributed between his dependents. An income distribution plan aims at providing all the individuals with an equal right to enjoy economic advantages that they have been given by society. The distribution of income refers to the fact that there are different sources of income. These include salary and wages, alimony, dividends, interest income, capital gains and estate distributions. Thus the incomes are classified into three different groups: income secured by assets, income provided by government or private funds and income derived through ownership of property or stocks.

In order to analyze the concept of income redistribution, it is important to know what causes income inequality. Two main theories have been postulated to explain this phenomenon: first, that income is distributed according to the way people’should’ be, and second, that some people are born into positions of privilege and should receive’merits’ while other people are born into inferior positions and should receive ‘penalties’ for their deeds. It is up to us, as taxpayers, to examine these theories and determine which one best explains the distribution of income in society. In this part I will briefly look at the theory of merit based income redistribution.

According to this theory, the distribution of income can be efficiently balanced if certain conditions are met. First, all citizens must have access to education. Second, many economists believe that the tax system should be based on wealth instead of income so that tax benefits are not necessarily ‘tracked’ by the financial status of an individual. And third, to redistribute income effectively, governments should favor educational investments, research and technology development, and basic health programs.

The second theory postulated by many economists is that income redistribution is not efficient unless the distribution is also accompanied by economic growth. In this theory, economic growth is defined as the rate at which money is being spent. There is a large debate among economists over the optimal amount of economic growth that is optimal, but most agree that sufficient economic growth is required in order to have an economically dynamic country. In addition, economic growth is believed to eventually stabilize the distribution of income. This is because, with time, economies tend to converge toward a similar level of output relative to their differences in scale of production.

The last theory postulated by many economists is that the distribution of income should also mirror the distribution of wealth. If everyone has the same amount of wealth (in today’s terms, cash), then the distribution of wealth will be equally distributed among all income groups. This theory is extremely important in socialist countries where the government distributes funds amongst different income groups in the society according to their wealth. On the contrary, in a free market, where there is competition among businesses and consumers, the end result is that businesses and consumers end up with the same level of wealth, and thus the end result is also equality among all citizens.

The most important way in which income inequality can be reduced is through taxation. Many countries have progressive taxes that are levied on high earners. These taxes can either be direct tax such as income taxes or indirect tax such as goods and services taxes. Both direct and indirect taxes can reduce societal income disparity.

Another way in which income redistribution can be done is through health care. One can directly apply for Medicaid or Medicare, which is a government program that provides health care for low-income earners. Also, there are a variety of social programs that redistribute income to low-income families. These include low-cost housing grants, educational programs that provide scholarships or monies that can be used towards the purchase of school supplies, fuel assistance for low-income families, etc.

The last theory on the relationship between income inequality and health equity suggests that income should be concentrated in low-income groups. For example, if a drug treatment center has one surgeon for every hundred people, that would equate to one surgeon perishing for every 100 people that live in that area. Thus, the social value of health equity is not just saving lives but also preventing economic problems from occurring. This concept is further extended by suggesting that income redistribution would be more effective if it targets high versus low socioeconomic groupings.