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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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  • Jorge Martínez-Vázquez

    () (Georgia State University)

  • Violeta Vulovic

    () (Georgia State University)

  • Blanca Moreno Dodson

    () (The World Bank)

Abstract

This paper focuses 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. However, the effect of corporate income taxes seems to be eroded away in open or globalized economies. We also 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.

Suggested Citation

  • Jorge Martínez-Vázquez & Violeta Vulovic & Blanca Moreno Dodson, 2012. "The Impact of Tax and Expenditure Policies on Income Distribution: Evidence from a Large Panel of Countries," Hacienda Pública Española, IEF, vol. 200(1), pages 95-130, March.
  • Handle: RePEc:hpe:journl:y:2012:v:200:i:1:p:95-130
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    Cited by:

    1. Francesca Gastaldi & Paolo Liberati & Elena Pisano & Simone Tedeschi, 2014. "Progressivity-Improving VAT Reforms in Italy," Working papers 6, Società Italiana di Economia Pubblica.
    2. repec:pal:imfecr:v:65:y:2017:i:2:d:10.1057_s41308-016-0021-1 is not listed on IDEAS
    3. Karen Davtyan, 2016. "Interrelation among Economic Growth, Income Inequality, and Fiscal Performance: Evidence from Anglo-Saxon Countries," Hacienda Pública Española, IEF, vol. 217(2), pages 37-66, June.
    4. Kyriacou, Andreas & Muinelo-Gallo, Leonel & Roca-Sagalés, Oriol, 2015. "On the redistributive efficiency of fiscal policy," MPRA Paper 63276, University Library of Munich, Germany.
    5. repec:eee:inteco:v:150:y:2017:i:c:p:80-95 is not listed on IDEAS
    6. Martorano, Bruno, 2016. "Taxation and inequality in developing countries - Lessons from the recent experience of Latin America," Working Papers 12799, Institute of Development Studies, International Centre for Tax and Development.
    7. Leonel Muinelo-Gallo & Oriol Roca-Sagalés, 2017. "Long-term effects of fiscal policy in Uruguay," Documentos de Trabajo (working papers) 17-02, Instituto de Economía - IECON.
    8. Conrad Scheibe, 2016. "Fiscal Consolidations and Their Effects on Income Inequality," UCL SSEES Economics and Business working paper series 2016-4, UCL School of Slavonic and East European Studies (SSEES).
    9. Gohar Samvel Sedrakyan & Laura Varela-Candamio, 2017. "The Impact of Public Expenditures on Economic Growth in Two Very Different Countries: A comparative Analysis of Armenia and Spain," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1702, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    10. Philipp Heimberger, 2018. "The Dynamic Effects of Fiscal Consolidation Episodes on Income Inequality," wiiw Working Papers 147, The Vienna Institute for International Economic Studies, wiiw.
    11. repec:cii:cepiie:2017-q2-150-6 is not listed on IDEAS
    12. Hur, Seok-Kyun, 2014. "Government Spending and Inclusive Growth in Developing Asia," ADB Economics Working Paper Series 415, Asian Development Bank.

    More about this item

    Keywords

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

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures

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