The importance of taxes and benefits in determining net household income

In evaluating household resources, we use household net disposable income. Disposable income is calculated by adding the original household income to any social transfers (benefits) received, and deducting applicable direct taxes and social insurance contributions. Original household income is made up of income from the market earned or received by members of the household, plus transfers from other households. This is usually taxed. Taxes include income tax and some other direct taxes paid by households. Income tends equally to be subject to employee and self-employed social insurance contributions (SICs). Benefits include public pensions, other benefits that are not means tested (contributory or universal) and those that are means tested and dependent on the income or assets of some or all members of the household.