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Cuadernos de Economía

Print version ISSN 0121-4772

Abstract

LLAMAS, Linda; ARAAR, Abdelkrim  and  HUESCA, Luis. Income redistribution and inequality in the Mexican tax-benefit system. Cuad. Econ. [online]. 2017, vol.36, n.spe72, pp.301-325. ISSN 0121-4772.  http://dx.doi.org/10.15446/cuad.econ.v36n72.65869.

The paper examines the redistributive effect that was achieved by the Mexican tax-benefit system in 2014 using personal income tax, indirect taxes, social security contributions and social benefits. Our goal is to analyse the impact on inequality due to fiscal system action and then go further by demonstrating to what extent the contributions have on the total redistribution effect. The Mexican tax-benefit sys-tem is characterised by significant pre-fiscal income inequality. The contribution made by Vertical Equity (VE) is relatively important, but Horizontal Inequity (HI) reduces its impact. Income taxation does not greatly contribute to VE. Furthermore, some households receive unequal benefits, and therefore decrease the positive effect induced by VE.

JEL: C14, D31, H23, H24.

Keywords : Non- parametric analysis; income inequality; redistribution; vertical equity and horizontal inequity; fiscal system.

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