Using the Relation between GINI Coefficient and Social Benefits as a Measure of the Optimality of Tax Policy
Atilla A. Uğur, Samer Sheikh Hamdo
Abstract
Atilla A. Uğur, Samer Sheikh Hamdo
Abstract
Maximizing the social welfare function is the main purpose of designing optimal tax system which includes both of commodity taxes and income taxes. But despite of so many economists’ contributions in the field of optimal taxation theory it is still very difficult to determine the directions that tax policy maker should follow to design the optimal tax policy. This paper tries to illustrate the importance of using the relation between GINI coefficient values and spending on social benefits as a share of GDP to measure the optimality of the tax policy.
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Maximizing the social welfare function is the main purpose of designing optimal tax system which includes both of commodity taxes and income taxes. But despite of so many economists’ contributions in the field of optimal taxation theory it is still very difficult to determine the directions that tax policy maker should follow to design the optimal tax policy. This paper tries to illustrate the importance of using the relation between GINI coefficient values and spending on social benefits as a share of GDP to measure the optimality of the tax policy.
Key concepts: Economics, Social welfare function, Gini coefficient, Optimal tax, Public economics, Measure (data warehouse), Relation (database), Commodity