Fiscal policy and income distribution

Most of the discussion is centered on the taxation side of the fiscal equation. The conclusions emerging from it will probably be disheartening to those who believe that a major assault on the problem of inequality can be effectuated by fiscal means. But this does not mean that tax policy can be of no help at all in promoting greater equity. Indeed, though its limitations are severe when judged against the goal of a major improvement in the overall distribution of income, the possibilities for significant achievements look far brighter when viewed in terms of the more limited objective of bringing about a more equitable distribution of the fiscal burden itself. In fact, if there is any single message to emerge from this paper, it is that when we look at a tax system with the distribution issue in mind, we are far better advised to think in terms of bringing about a fairer distribution of the tax burden than in terms of having a major impact on the overall distribution of income in the society in question