The country just ahead of the US on OECD's most-unequal list illustrates how a particular policy issue, in this case the taxation system, can exacerbate the income gap. Turkey enjoyed muscular growth over the past decade, averaging 3.5 percent between 2007 and 2011, and even recording a robust 8.5 percent last year. Yet income inequality has barely budged (it has a Gini index of about 40).
The fact that more than two-thirds of state income is derived from an 18 percent sales tax on most goods and services – rather than income taxes levied on individuals – has much to do with it. And even the sales tax can favor the rich: Sales of some precious stones, for one, incur zero tax.
