Tax negotiations between political parties impact economic growth and income inequality.
This paper looks at how the rate of economic growth is influenced by tax negotiations between two political parties representing different social classes. Taxes can either help growth by funding public services or hinder it by redistributing income. Different social classes have different views on growth and redistribution, leading to conflicts resolved through tax negotiations. The study suggests that countries with lower income inequality tend to have higher growth rates. However, government policies cannot both boost growth and reduce inequality at the same time.