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Income inequality (2) - Coggle Diagram

- - - - PWM will be extended to three new sectors – retail, food services and waste management
      - Existing PWM for cleaning, security and landscape workers will also extend to in-house workers
      - Occupational progressive wages will be introduced for administrators and drivers across all sectors
        
        Since lower-wage occupations across many sectors cannot be targeted using sectoral progressive wages.
    - - Only applies for employees but not those who are self-employed
  - - - However, despite growth of wages of those in PWM, the current PWM wages still fall below the reasonable starting point of living wage of $2906.
- - - - Example: Singapore
        The government provides MOE student care centres so parents do not have to look for more expensive options out there. The low-income families will even receive more subsidies so that it is cheaper. Parents can also spend less on enrichment classes since by engaging in the various self-help groups, which provide enrichment classes for those who need them at low cost rather than private tuition.
  - - - Example: South Africa taxation system
        
        Despite being rated as one of the most unequal on the Gini Index, the taxation system had the greatest impact on inequality, demonstrating that a more nuanced approach to inequality statistics can yield dramatically different results.
        
        According to the world bank, pre-tax, the incomes of the richest decile are more than 1,000 times higher than the poorest.
        However ,when the impact of taxes and social spending are factored in, the wages of the richest are reduced dramatically, becoming 66 times higher than the poorest
        
        Successful due to the scale of impact of the taxation
        
        The South African tax regime is based on a graduated tax bracket system, functioning as a redistributive tool of income
        
        For the 2019/2020 year, individuals under the age of 65 will be subject to tax if their income exceeds a threshold of R79 000.
        
        Any income above this amount and up to R195 850 is subject to tax at 18%. Similarly, any income above R195 850 constitutes a separate bracket, and is taxed at a higher rate of 26% of the amount above the threshold of the second bracket up to the third bracket.
        
        Thus, the more money one earn, the more tax one pay in raw figures as well as proportionally, thus reducing income inequality after tax
        
        Just over 1% of the population can afford to pay tax.
        
        The top 1% of taxpayers are said to be paying 61% of the total tax bill
        
        This thus shows that richest loses a lot of income after taxation
      - Example: Sweden tax system
        
        With its high taxation rates, the rich will lose a lot more money than the poor for taxation, thus equalising the overall income gained after taxation.
        
        Sweden's average local tax rate is 32.34%.
        
        Sweden currently levies a corporate income tax of 20.6%
        
        Earners above a certain income threshold set by the Tax Agency also pay 20% state tax.
        
        This further allows the rich to pay more taxes, while since those less than the income threshold do not need to pay, this reduces the income inequality after taxation.
        
        Successful since Sweden still belongs to the group of most equal OECD countries according to ODEC
  - - - This allows more children to be educated and have sufficient knowledge and qualifications to find better and higher-pay jobs when they are older to break the vicious cycle of poverty, thus reducing income inequality.
  - - - This reduces the focus of minimum wage and ensures that gradually through hard work, workers will earn more money over time. This thus reduces income inequality since the poor can earn significantly more money over time.
        
        However, in reality, it may not effectively solve the problem of income inequality.
        
        Example: Singapore is a famous example for using the Progressive wage model, but the income inequality problem has been getting worse over the years.
        
        The median work income among all workers in 2020 exceeded the reasonable starting point for living wage of $2906 by 50%, but the current PWM (Progressive Wage Model) wages fall significantly below.
- - - - Purchasing power of the poor has significantly dropped. It has been determined that the top 10% wager-earning households earn as much as 25 times more than the bottom 10%.
      - While the top earners saw their real wages increase, those on the bottom saw their real wages decrease