Property income

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Property income refers to profit or income received by virtue of owning property. The three forms of property income are rent, received from the ownership of natural resources; interest, received by virtue of owning financial assets; and profit, received from the ownership of capital equipment.[1] As such, property income is a subset of unearned income and is often classified as passive income.

Economics[edit]

Property income is nominal revenues minus expenses for variable inputs (labor, purchased materials and services). Property income represents the return for the supply of both physical capital and financial capital.

Capitalist economic systems are usually defined as those systems where the means of production are privately owned through equity, stock, bonds or privately held by a group of owners so that the income generated by property (Capital goods, land, and financial assets) accrues to a small subset of the population while the majority of the population subsists primarily through wages, salaries or commissions.

In Marxian economics and related schools, property income is a portion of the surplus value produced by an economy, where "surplus value" refers to value beyond what is needed for subsistence. As such, income derived through property ownership constitutes a type of "unearned income" on the basis of economic exploitation for the capitalist class that receives and lives off of property income,[2] because its recipients receive property income by virtue of owning property regardless of their contribution to the social product. As such, the existence of property income based on private property forms the basis for the class division in capitalist economies.

One economic perspective is to bring productive property under public ownership so that each citizen would receive a share of the property income in addition to their normal wage or salary (see: Social dividend). This would eliminate class distinctions, reduce economic inequality, and enable greater economic stability.[3]

See also[edit]

References[edit]

  1. ^ O'Hara, Phillip (September 2003). Encyclopedia of Political Economy, Volume 2. Routledge. p. 1135. ISBN 0-415-24187-1. Property income is, by definition, received by virtue of owning property. Rent is received from the ownership of land or natural resources; interest is received by virtue of owning financial assets; and profit is received from the ownership of production capital. Property income is not received in return for any productive activity performed by its recipients. 
  2. ^ Sherman, Howard J (1995). Reinventing Marxism. Johns Hopkins University Press. p. 130. ISBN 978-0801850776. Another index of the capitalist class is the fact that those making more than a million dollars a year made more than 75 percent of their income from property ownership, in the form of profit, rent, and interest…Finally, the income of the capitalist class, that is, property income, including profit, rent, and interest, constitutes more than 28 percent of all U.S. income. 
  3. ^ Yunker, James (April 1992). Socialism Revised and Modernized: The Case for Pragmatic Market Socialism. Praeger. pp. 29–31. ISBN 978-0275941345.