Taxes in a simple wealth distribution model by inelastically scattering particles

TL;DR

This paper introduces a particle scattering model to simulate wealth distribution in an economy, incorporating taxes and redistribution, revealing that optimal tax levels depend on redistribution strategies.

Contribution

It presents a novel inelastic scattering particle model that captures key features of wealth distribution and explores the impact of different tax and redistribution policies.

Findings

Different optimal tax levels depend on redistribution criteria

The model reproduces salient features of real wealth distributions

Tax redistribution influences wealth inequality dynamics

Abstract

In this work we use an inelastic scattering process of particles to propose a model able to reproduce the salient features of the wealth distribution in an economy by including taxes to each trading process and redistributing that collected among the population according to a given criterion. Additionally, we show that different optimal levels of taxes may exist depending on the redistribution criterion.