The tax tectonics: Well-being and wealth inequality in relation to a shift in the tax mix from direct to indirect taxes

Indirect taxes are on the rise – both in terms of geographical spread and fiscal importance – at the expense of the proportion of direct taxes. This shift from direct to indirect taxes (tax shift) is primarily driven by a desire to boost economic growth (GDP) and job creation. At the same time, scholars and supranational bodies are increasingly arguing that economic policy should not solely be directed at economic growth, but at more-encompassing, multidimensional well-being. This study confronts both bodies of thought. It examines how the tax shift can be consonant with the general goal of promoting well-being that is paramount in many countries. It does so by assessing the tax shift’s impact on the distribution of wealth and identifying various well-being-related tendencies that this changing distribution could potentially entail.