The effects of the tax policies on income distribution in İran: 1979-2009 period

One of the most important duties of the governments is controlling of income inequality. For this reason, governments require to analyze how they will manage people's income for reduce inequality by using their existing tools. Income inequalities can be governed with the methods such as tax policies, government spending, minimum wage, financial support for low income people. In addition, tax policies are the most important fund for government spending. The aim of this paper is to analyze impact of taxation on distribution of income. The effect of the direct and indirect taxes on income inequality is examined. According to results of the study, increase of the indirect tax affects income distribution in a negative way, on the other hand rise of the direct tax affect income distribution positively.