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darvishi, B., Boustani, S. (2018). Tax Progressivity and Income Inequality: A case study of a selected number of countries with natural resource rents and OECD countries. Journal of Executive Management, 12(24), 95-119. doi: 10.22080/iejm.2018.1939
bagher darvishi; Somayeh Boustani. "Tax Progressivity and Income Inequality: A case study of a selected number of countries with natural resource rents and OECD countries". Journal of Executive Management, 12, 24, 2018, 95-119. doi: 10.22080/iejm.2018.1939
darvishi, B., Boustani, S. (2018). 'Tax Progressivity and Income Inequality: A case study of a selected number of countries with natural resource rents and OECD countries', Journal of Executive Management, 12(24), pp. 95-119. doi: 10.22080/iejm.2018.1939
darvishi, B., Boustani, S. Tax Progressivity and Income Inequality: A case study of a selected number of countries with natural resource rents and OECD countries. Journal of Executive Management, 2018; 12(24): 95-119. doi: 10.22080/iejm.2018.1939

Tax Progressivity and Income Inequality: A case study of a selected number of countries with natural resource rents and OECD countries

پژوهشنامه اقتصاد کلان Macroeconomics Research Letter
Article 4, Volume 12, Issue 24, December 2018, Pages 95-119    PDF (843.88 K)
Document Type: Scientific paper
DOI: 10.22080/iejm.2018.1939
Authors
bagher darvishi* 1; Somayeh Boustani2
1Assistant professor, Department of economics, Faculty of Human science, ILam University, Ilam, Iran
2M.A in economics Ilam university
Receive Date: 01 January 1970,  Accept Date: 01 January 1970 
Abstract
The main purpose of this article is to study the impact of progressive income tax systems on income inequality. In so doing, by using progressive tax data which were developed by Peter and Duncan (2008) three panel data model are estimated for a selected number of countries with natural resource rents and OECD countries. The findings showed that although progressive tax reduced the observed income inequality, it had a smaller impact on the real inequality which was measured by consumption-based Gini coefficient and may even increase the real inequality under specific conditions (e.g.in countries with weak law and order and a large informal nontaxable sector). Also natural resource rents and inflation are the main factors affecting inequality. Based on the result a progressive tax structure and raise the top tax rate will not necessarily reduce inequality, but also in terms of the underground economy and weak institutions, progressive tax systems may even worsen inequality, so to reduce inequality we recommend that government should pay special attention to macroeconomic stabilization and optimal management of oil revenue spending.
Keywords
Progressivity tax; Income inequality; Democracy; Law and order
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