Incidence of the tax burden on inequality at the global level and by groups of countries: Empirical evidence for 97 countries, using panel data techniques

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Published: dic. 6, 2021

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Patricia Vaca
Carrera de Economía, Universidad Nacional de Loja, Loja, Ecuador

Abstract

One of the main mechanisms for reducing inequality around theworld is public investment,which is mainly financed by tax revenues. Considering the importance of this relationship,this research focuses on determining the effect of the tax burden on inequality in 97 countriesglobally and by groups of countries during the period 1995-2015. This study is basedon Piketty’s (2014) theory, which determines that taxes are a strategic factor in reducinginequality. Using panel data econometric techniques we applied a Generalized LeastSquares (GLS) model to determine the relationship of inequality and tax burden. The resultsobtained determined that the tax burden has a highly significant relationship bothglobally and for different income levels, excluding low-income countries. The results findthat gross capital formation, as well as GDP per capita, act jointly as inequality reducers atthe country level. In this sense, policy implications should be oriented towards improvingincome distribution by the state, as well as strengthening fiscal transparency.

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How to Cite
Vaca, P. (2021). Incidence of the tax burden on inequality at the global level and by groups of countries: Empirical evidence for 97 countries, using panel data techniques. Revista Económica, 9(1), 87–96. Retrieved from https://revistas.unl.edu.ec/index.php/economica/article/view/1151
Issue
Vol. 9 No. 1 (2021): RVE Vol 9 (January - June 2021)
Section
RESEARCH ARTICLES
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