The Structure of Household Income and the Distributional Impact of Income Taxes and Social Security Contributions

This chapter analyses the distributional impact of income taxes and social security contributions in Greece, and particularly in relation to various income components. Some studies provide evidence that the progressive income taxation imposed by Greek legislation does not have the expected effects on the distribution of household income. Income taxes and social security contributions have generally failed to have a significant redistributive impact. The (proportional) distributions of gross and disposable household income appear almost identical (see Papatheodorou, 2003 ). As Hills (1988) noted, since taxation is considered a ‘key weapon’ in the redistribution of income, the question that emerges is whether, and to what extent, income taxes and social security contributions achieve their distributional goals.