The country just ahead of the US on OECD's most-unequal list illustrates how a particular policy issue, in this case the , 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 鈥� rather than income taxes levied on individuals 鈥� 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.
