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TRANSFER PAYMENTS

8 May, 2015 - 11:09

Transfer payments are additions and subtractions to national income to obtain personal income. Additions include social security retirement payments, unemployment benefits and welfare payments. Subtractions include social security contributions, corporate income taxes and undistributed corporate profits.

Transfer payments are payments which are not connected to any productive activity. The typical example of a transfer payment is social security: contributions to social security are collected from all those who work and are passed on to those who are retired.