Redistribution requires distribution of taxes.
Serhan Cevik 15, Senior Economist at the IMF; and Carolina Correa-Caro, Research Analyst at the IMF, 9/21/2015, “Growing (Un)equal: Fiscal Policy and Income Inequality in China and BRIC+,” Inequality and Fiscal Policy, Chapter 19, https://doi.org/10.5089/9781513567754.071
Income distribution depends on a complex array of factors, including the design of fiscal policy instruments. According to the Standardized World Income Inequality Database (SWIID), the market-income Gini coefficient (before taxes and transfers) in China increased by 82 percent between 1980 and 2013, whereas the net Gini coefficient (after taxes and transfers) increased by 90 percent (Figure 19.1). This difference indicates that the redistributive impact of fiscal policy is eroding. Fiscal redistribution—defined as the difference between market-income and net Gini coefficients—amounted to an average of 1.7 Gini-index points in the 1990s, but it turned negative during the period 2000-13, averaging -1.1 Gini-index points. Fiscal policy, however, can matter not just for redistribution, but also for market-income inequality. Redistribution is, of course, a function of the level and composition of taxation and spending as well as their distribution across income groups. The distribution of taxes in China, for example, remains regressive, with taxes accounting for 10.8 percent of annual income among the bottom decile of households (and 13.3 percent among the bottom 5 percent) compared with 8.7 percent among the top decile of households.