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

50 Pages Posted: 13 Dec 2012

See all articles by Jorge Martinez-Vazquez

Jorge Martinez-Vazquez

Georgia State University - Andrew Young School of Policy Studies

Blanca Moreno-Dodson

World Bank

Violeta Vulovic

Georgia State University

Date Written: April 1, 2012

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.

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

JEL Classification: H23, H24, H51, H52, H53, H54

Suggested Citation

Martinez-Vazquez, Jorge and Moreno-Dodson, Blanca and Vulovic, Violeta, The Impact of Tax and Expenditure Policies on Income Distribution: Evidence from a Large Panel of Countries (April 1, 2012). Andrew Young School of Policy Studies Research Paper Series No. 12-30, Available at SSRN: https://ssrn.com/abstract=2188608 or http://dx.doi.org/10.2139/ssrn.2188608

Jorge Martinez-Vazquez (Contact Author)

Georgia State University - Andrew Young School of Policy Studies ( email )

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Blanca Moreno-Dodson

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Violeta Vulovic

Georgia State University ( email )

35 Broad Street
Atlanta, GA 30303-3083
United States

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