The Fiscal Dimension of the Welfare State: The Role of Taxation in Wealth Redistribution

Abstract

Taxation has emerged as a decisive force in the redistribution of wealth within contemporary societies, acting as a strategic instrument for mitigating inequalities.

Progressive income taxes, advocated by Thomas Piketty (2013), offer a targeted approach to reducing disparities. By levying a higher percentage of higher incomes, these taxes aim to restore financial equilibrium. At the same time, wealth taxes, in line with Piketty's vision, target the concentration of wealth within a narrow elite. Social transfers, supported by Joseph Stiglitz (2012), are positioned as a vital lever. These programs, financed by tax revenues, help to reduce poverty and improve the standard of living of disadvantaged populations, thus realizing the vision of equal opportunity.

However, some nuances emerge from the warnings of Dani Rodrik (2011). This Turkish economist warns of the risks of excessive taxation on capital, highlighting the potential disincentives to investment and economic growth.

Our article aims to highlight the significant impact of taxation on the distribution of wealth, within the broader framework of the social state by employing an in-depth conceptual review to synthesize and analyze relevant research from scholars. By orienting tax policies towards progressive models, we seek to strengthen social justice and contribute to inclusive economic growth. Our aim is to explore balanced approaches that maximize redistributive benefits while stimulating investment. This article aspires to catalyze constructive debates to guide decision-makers towards informed fiscal choices, shaping a more robust and equitable social state.

Keywords: Taxation, wealth distribution, progressive taxation, social transfers, social state.

Classification JEL: H23, I39

Paper type: Theoretical article