308 Glossary: Income Distribution
- earned income tax credit (EITC)
- a method of assisting the working poor through the tax system
- effective income tax
- percentage of total taxes paid divided by total income
- estate tax
- a tax imposed on the value of an inheritance
- income inequality
- when one group receives a disproportionate share of total income or wealth than others
- income
- a flow of money received, often measured on a monthly or an annual basis
- Lorenz curve
- a graph that compares the cumulative income actually received to a perfectly equal distribution of income; it shows the share of population on the horizontal axis and the cumulative percentage of total income received on the vertical axis
- Medicaid
- a federal–state joint program enacted in 1965 that provides medical insurance for certain (not all) low-income people, including the near-poor as well as those below the poverty line, and focusing on low-income families with children, the low-income elderly, and the disabled
- near-poor
- those who have incomes just above the poverty line
- poverty line
- the specific amount of income needed for a basic standard of living
- poverty rate
- percentage of the population living below the poverty line
- poverty trap
- antipoverty programs set up so that government benefits decline substantially as people earn more income—as a result, working provides little financial gain
- poverty
- the situation of being below a certain level of income needed for a basic standard of living
- progressive tax system
- a tax system in which the rich pay a higher percentage of their income in taxes, rather than a higher absolute amount
- quintile
- dividing a group into fifths, a method often used to look at distribution of income
- redistribution
- taking income from those with higher incomes and providing income to those with lower incomes
- Supplemental Nutrition Assistance Program (SNAP)
- a federally funded program, started in 1964, in which each month poor people receive SNAP cards they can use to buy food
- safety net
- the group of government programs that provide assistance to the poor and the near-poor
- wealth
- the sum of the value of all assets, including money in bank accounts, financial investments, a pension fund, and the value of a home