Effects of taxes, redistribution actions and fiscal evasion on wealth inequality: An agent-based model approach

Abstract

In capitalist societies, only one right can be fully exercised without any constraints: the limitless accumulation of wealth. This imperative, or fundamental axiom, is the ultimate cause of the raising waves of inequalities observed today. In this work, we extended the agent-based model proposed by Castro de Oliveira (2017) to study the effects of non-uniform income redistribution policies and tax evasion on the steady-state wealth distribution of economic agents. Our simulational results strongly support that well designed policies of income redistribution are an essential tools for promoting more economically egalitarian and sustainable societies. Furthermore, we show that tax evasion can substantially mitigate the effects of redistribution, pushing the system toward the critical point of absolute wealth condensation and highlighting the importance of strict control over the taxes collected within an economy.