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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 / Review of Public Economics, 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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    More about this item

    Keywords

    Tax Policy; Public Expenditures; Income Distribution; Tax Progressivity;
    All these keywords.

    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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