Governments may seek to reduce income inequality, but the degree and approach are a matter of both economics and political philosophy. Efforts to reduce inequality can involve trade-offs between competing goals, including economic efficiency, individual economic freedom, and greater equality of income and opportunity.

Different political philosophies weigh those goals differently. Philosopher John Rawls argued that social and economic inequalities could be justified when they benefited the least advantaged members of society. Libertarian theories, by contrast, generally place greater emphasis on individual rights and private property and may regard unequal economic outcomes as acceptable when they result from voluntary exchanges and legitimately acquired property.

Governments can seek to reduce income inequality through taxes, income transfers, labor policies, education, and other public programs. Progressive income taxes can reduce differences in after-tax income, while inheritance taxes can affect the distribution of wealth across generations. Means-tested benefits, wage subsidies, and other transfers can increase the resources available to lower-income households.

Labor policies can also affect income distribution. Minimum-wage laws, collective-bargaining rights, and policies aimed at increasing employment can influence wages, particularly for lower-paid workers. Access to education, health care, and childcare can affect people’s ability to enter the labor force, develop skills, and obtain higher-paying work. Nondiscrimination and affirmative action policies may also seek to reduce barriers to employment and advancement.

Other proposals focus more directly on the ownership of wealth or the transfer of income. These include broader worker ownership, redistribution of capital or land, a negative income tax, and universal basic income. At the international level, proposals have included debt forgiveness, changes to trade agreements intended to benefit disadvantaged populations, and taxes on financial transactions, such as the Tobin tax.