During the period 1976-2000, the rising trend of disposable income adjusted by the size of the household becomes flat when transfer income is included as the fourth component of disposable income in Taiwan. The major findings from static inequality decomposition are as follows: (1) Transfer expenditures are income equalizing. (2) The equalizing effect of property taxes declines over time and is weaker than that of income tax. (3) The role of transfer receipts from the government shifts from pro-rich to pro-poor gradually. (4) Transfer expenditures to private individuals is the most important equalizing factor among transfer receipts and transfer expenditures. (5) The equalizing effect of taxes is larger than that of transfer receipts from the government. (6) Benefit of insurance is income equalizing before 1993 and income disequalizing after then. (7) The net equalizing effect of transfer receipts and transfer expenditures increases over time. Finally, dynamic inequality decomposition is applied to confirm the above findings.