TY - JOUR

T1 - The Influence of Taxation on Income Inequality

T2 - Analysis of the Practice in the EU Countries

AU - Dianov, Sergey

AU - Koroleva, Lyudmila

AU - Pokrovskaia, Natalia

AU - Victorova, Natalia

AU - Zaytsev, Andrey

N1 - Publisher Copyright: © 2022 by the authors.

PY - 2022/8

Y1 - 2022/8

N2 - The growing economic inequality around the world is recognized as a global problem of mankind. At the same time, the key tool for reducing inequality and ensuring the achievement of sustainable development goals is the taxation system given its distributive function. That is why this paper puts forward and proves a scientific hypothesis according to which direct taxation has a significant impact on economic inequality, with its scale and sphere depending on the level of economic development and the specific architecture of the tax system adopted in a particular country. The study relies on data from 28 European Union countries, including the United Kingdom, whose tax systems are not identical but harmonized in accordance with European Union directives, the same as the legislation in other economic sectors. Accordingly, it can be concluded that similar institutional characteristics are present. We have used the method of two-stage cluster analysis, which is meant for identifying the natural splitting of the mass of data into groups, then carried out regression analysis and built some models. The contribution of the study is revealing a number of important regularities that are significant for characterizing the dependence of income inequality on direct taxation as well as formulation recommendations for improving the tax policies of European Union countries, with the potential of policy implications. The results obtained can play a significant role in the development and further harmonization of tax systems and resolving the global problem of increased inequality within and between countries.

AB - The growing economic inequality around the world is recognized as a global problem of mankind. At the same time, the key tool for reducing inequality and ensuring the achievement of sustainable development goals is the taxation system given its distributive function. That is why this paper puts forward and proves a scientific hypothesis according to which direct taxation has a significant impact on economic inequality, with its scale and sphere depending on the level of economic development and the specific architecture of the tax system adopted in a particular country. The study relies on data from 28 European Union countries, including the United Kingdom, whose tax systems are not identical but harmonized in accordance with European Union directives, the same as the legislation in other economic sectors. Accordingly, it can be concluded that similar institutional characteristics are present. We have used the method of two-stage cluster analysis, which is meant for identifying the natural splitting of the mass of data into groups, then carried out regression analysis and built some models. The contribution of the study is revealing a number of important regularities that are significant for characterizing the dependence of income inequality on direct taxation as well as formulation recommendations for improving the tax policies of European Union countries, with the potential of policy implications. The results obtained can play a significant role in the development and further harmonization of tax systems and resolving the global problem of increased inequality within and between countries.

KW - cluster analysis

KW - direct taxes

KW - economic inequality

KW - European Union countries

KW - sustainable development

KW - taxation system

UR - http://www.scopus.com/inward/record.url?scp=85137006235&partnerID=8YFLogxK

UR - https://www.mendeley.com/catalogue/739d1d5b-5d43-3d89-b04d-c75df72833b4/

U2 - 10.3390/su14159066

DO - 10.3390/su14159066

M3 - Article

AN - SCOPUS:85137006235

VL - 14

JO - Sustainability

JF - Sustainability

SN - 2071-1050

IS - 15

M1 - 9066

ER -