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The Impact of Tax and Expenditure Policies on Income Distribution: Evidence from a Large Panel of Countries

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Abstract

The main focus of this paper is on the potential role that taxation and public expenditure policies play in general in affecting income distribution. We find that progressive personal income taxes and corporate income taxes reduce income inequality. The effect of corporate income taxes seems to be eroded away in open or globalized economies. We also generally find that general consumption taxes, excise taxes and customs duties have a negative impact on income distribution. On the expenditure side, we find that higher shares of GDP on social welfare, education, health and housing public expenditures have a positive impact on income distribution.

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Paper provided by International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University in its series International Center for Public Policy Working Paper Series, at AYSPS, GSU with number paper1225.

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Length: 45 pages
Date of creation: 30 May 2012
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Handle: RePEc:ays:ispwps:paper1225

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Phone: 404-413-0235
Fax: 404-413-0244
Web page: http://aysps.gsu.edu/isp/index.html

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Keywords: Tax Policy; Public Expenditures; Income Distribution; Tax Progressivity;

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