THE EFFECT OF TAXES ON INCOME DISTRIBUTION: AN ANALYSIS FOR TURKEY AND OTHER SELECTED OECD COUNTRIES

Year 2020, Proceedings of The Third Economics, Business And Organization Research (EBOR) Conference, 413 - 426, 31.12.2020

Betul Hayrullahoglu Osman Tuzun

Abstract

Equal distribution of income is important for social peace and economic stabilization. However, income is not distributed equally in any country and the governments try to provide the fairest distribution of income by intervening with various instruments. As an economic instrument, taxation is one of the most direct way to keep inequality in check and reduce poverty in the short term.
This study aims to investigate the effect of taxes on income distribution. In this context, to what extent the change in the share of total tax revenues in the Gross Domestic Product affects the gini coefficient in Turkey and other selected OECD Countries between 2002 and 2019 is analyzed by using Panel ARDL (Auto Regressive Distributed Lag) model. As a result of the analysis, it is concluded that an increase in the share of tax revenues in GDP decreases the Gini index by 0.17.

Keywords

Tax Income, Income Distribution, Gini Index

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