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The Impact of The Tax System Structure on The Narrowing of Income Disparities in OECD Countries

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  • Mazurek-Chwiejczak Małgorzata

    (Maria Curie-Skłodowska University (UMCS) in Lublin, Poland)

Abstract

Social disparities have a common and consistent character in the vast majority of contemporary countries. The level of income inequality in OECD countries has grown in the past 30 years and is still rising. Taxes and tax systems, aside from social transfers, are fiscal instruments widely used in compensation policy.The aim of the article is to define the optimal structure of tax systems (i.e. the share of different tax categories in tax revenues) in terms of narrowing income disparities. To achieve this aim, scatter diagrams have been used. For the purpose of the article a tentative hypothesis has been formulated that the optimal tax system in terms of narrowing income disparities is characterised by a relatively large share of Personal Income Tax and at the same time a relatively low share of consumption taxes in tax revenues. The detailed analysis is focused on the countries for which the full data is available. The group of countries covers some “old” member states of the European Union (Austria, Belgium, Finland, Greece, Ireland, Italy, Luxembourg and the United Kingdom), the South- -East European countries (the Czech Republic, Estonia, Poland, the Slovak Republic and Slovenia) as well as non-EU countries (Canada and Iceland). These countries represent different levels of socio-economic development and, as a result, the variety of situations concerning the distribution of income.

Suggested Citation

  • Mazurek-Chwiejczak Małgorzata, 2016. "The Impact of The Tax System Structure on The Narrowing of Income Disparities in OECD Countries," Financial Internet Quarterly (formerly e-Finanse), Sciendo, vol. 12(3), pages 27-37, October.
    • Handle: RePEc:vrs:finiqu:v:12:y:2016:i:3:p:27-37:n:5
    DOI: 10.1515/fiqf-2016-0146
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    References listed on IDEAS

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    1. Carolina Torres & Kirsti Mellbye & Bert Brys, 2012. "Trends in Personal Income Tax and Employee Social Security Contribution Schedules," OECD Taxation Working Papers 12, OECD Publishing.
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    4. Richard Almy, 2014. "Valuation and Assessment of Immovable Property," OECD Working Papers on Fiscal Federalism 19, OECD Publishing.
    5. Dominique Paturot & Kirsti Mellbye & Bert Brys, 2013. "Average Personal Income Tax Rate and Tax Wedge Progression in OECD Countries," OECD Taxation Working Papers 15, OECD Publishing.
    6. Neil Warren, 2008. "A Review of Studies on the Distributional Impact of Consumption Taxes in OECD Countries," OECD Social, Employment and Migration Working Papers 64, OECD Publishing.
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