Fiscal Redistribution Through Tax Policy: Impacts on Wealth Disparities

Abstract

This article examines the extent to which tax policy can serve as an effective tool for fiscal redistribution and reducing wealth disparities. Framed around the central question of how different tax instruments, particularly progressive income, wealth, and corporate taxes affect inequality, the study uses a systematic literature review of several peer-reviewed articles and institutional reports published until 2023. The findings indicate that in high-income countries with robust administrative capacity and high public trust, progressive tax systems can substantially reduce post-tax inequality. In contrast, many developing countries face structural barriers such as weak enforcement, narrow tax bases, and elite resistance, which limit the redistributive impact of taxation. The discussion highlights that tax policy outcomes are influenced not only by fiscal design but also by broader political, institutional, and international dynamics. The review concludes that while tax policy holds strong potential to address wealth inequality, sustainable redistribution depends on a comprehensive approach that combines equitable tax structures with institutional reform and global cooperation.