Improving Income Distribution in Turkey

Abstract

This paper aims to solve the inequality problems in Turkey, based on the principles of the public economy and concerning fairness in taxation. According to Musgrave, the founder of modern public finance, as like the efficiency in resource allocation and stabilization, fairness in income distribution is one of the three main goals of the public economy to be fulfilled. If these allocational and distributional main goals are not satisfied, the sub-goals such as sustainable growth rate, full employment, foreign trade balance and price level stability cannot be sustained. Based on Musgrave’s theory, the first part of the paper includes those factors that affect income distribution, such as the state of distribution of GNP (gross national product) and wealth; provision of public services; and other factors such as taxation, educational opportunities, father’s occupation, ownership of the factor of products, employment, quality of democracy, corruption and public borrowing. The second part of my paper comprises those methods such as the Lorenz Curve, Gini Coefficient and distribution of income in Turkey, with respect to the 20% quintiles and 10% population segments. The result of all these methods reveals that the state of income distribution in Turkey is one of the worst among the member countries of the European Union, calling for governmental intervention in order to improve it. In the concluding section of this study, we consider some fiscal policy measures to be undertaken by the government to improve income distribution and to reduce poverty in Turkey. © Peter Lang GmbH.