Evaluation Of Tax Policies on Income Distribution using the GMM Approach

Document Type : Original Article

Authors

1 Ph.D in Economics, Faculty of Human Sciences, Islamic Azad University, Abhar Branch, Abhar, Iran

2 Associate Professor of Economics, Faculty of Economics and Political Science, Shahid Beheshti University, Tehran, Iran

3 Professor of Economics, Faculty of Economics and Social Sciences, Bu-Ali Sina University, Hamedan, Iran

4 Assistant Professor of Economics, Faculty of Human Sciences, Islamic Azad University, Abhar Branch, Abhar, Iran

Abstract

Unequal distribution of income and wealth in society will cause serious problems in the economic, social and political spheres. In this regard, tax resources are the most important tools of the government to improve and redistribute income. Considering the role and importance of taxes in income distribution, this study intends to evaluate the tax revenues in terms of income distribution in the provinces of the country using 2006 to 2016 data and the GMM model. In this regard, the effect of corporate income tax, personal income tax, wealth tax, tax on goods and services, inflation rate, unemployment rate and GDP growth on the Gini coefficient (income distribution inequality index) has been considered. Based on the results, the effect of corporate income tax, wealth tax, inflation rate and economic growth on Gini coefficient is positive and significant. As these variables increase, the Gini coefficient increases and income inequality increases. The effect of personal income tax, value added tax and unemployment rate on the Gini coefficient is negative and significant, in other words, as these variables increase, the Gini coefficient decreases.

Keywords


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