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In the so-called ``fair'' models of peer-to-peer wealth exchanges, economicinequality tends to reach its maximum value asymptotically. This global trendis evident as the richest continuously accumulate a larger share of wealth atthe expense of others. To address the mounting issue of inequality, differentstrategies of taxes and redistribution are commonly employed. Our study delvesinto the interplay between wealth and trade (consumption) tax bases, probingtheir impact on wealth distribution within wealth-conservative economies. Theultimate aim is to unearth an optimal framework that adeptly curbsinequality.Through a meticulous analysis of varying tax rates and theallocation of the collected tax to the most economically vulnerable strata, weunveil a compelling pattern resembling two distinct phases. These phasesdelineate the most effective systems for inequality mitigation. Our findingsunderscore the synergistic potential of amalgamating these tax systems,surpassing the individual efficacy of each. This synthesis beckons policymakersto weave together tax rates and precision-targeted redistribution, crafting taxsystems that wield the potential for tangible and substantial reductions ineconomic disparity.

Effectiveness of wealth-based vs exchange-based tax systems in reducing inequality