Vergi Harcamaları ve Gelir Eşitsizliği İlişkisinde Kurumsal Kalitenin Rolü
The Role of Institutional Quality in the Relationship Between Tax Expenditures and Income Inequality

Summary/Abstract: This study analyses whether institutional quality has an impact on the relationship between tax expenditure and income distribution. To this end, annual data from ten countries — Germany, the USA, Argentina, Australia, Brazil, France, India, the UK, Canada, and Mexico — for the period 2006–2022 were used, and the panel regression method was applied. The dependent variable, income inequality, is measured by the Gini index. Tax expenditure is represented by the share of foregone tax revenues in Gross Domestic Product. The analysis reveals that tax expenditures directly increase income inequality. However, the results differ when institutional quality indicators are included in the model. In countries with strong institutions in areas such as corruption control, government effectiveness, regulatory quality, the rule of law, and democratic accountability, the inequalityincreasing effect of tax expenditures weakens. Conversely, this effect reverses and becomes inequality-reducing when political stability is high. The findings suggest that fiscal policies aimed at reducing the negative impact of tax expenditures on income inequality should be integrated with institutional reforms.

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