The Impact of a 10% Tax Rate and Redistribution on Resource Concentration in Networks

Sarah Leutner; Illia Terpylo; Detlef Groth

doi:10.52905/hbph2025.1.94

Authors

Sarah Leutner University of Potsdam, Institute of Biochemistry and Biology, 14476 Potsdam-Golm https://orcid.org/0009-0002-3076-2690
Illia Terpylo University of Potsdam, Institute of Biochemistry and Biology, 14476 Potsdam-Golm, Germany
Detlef Groth University of Potsdam, Institute of Biochemistry and Biology, 14476 Potsdam-Golm, Germany https://orcid.org/0000-0002-9441-3978

DOI:

https://doi.org/10.52905/hbph2025.1.94

Keywords:

Redistribution, Social Networks, Taxation, Triad Motif, Winner-Loser Model

Abstract

Background Resource disparities are common in social networks, often driven by competitive interactions. Exploring how interventions like taxation influence these inequalities can reveal mechanisms for more balanced distributions.

Objectives This study investigates the effects of a 10% tax rate and redistribution on inequality and resource stability within two network models: the ‘Winner-Loser Model’ which intensifies hierarchies through competitive interactions, and the ‘Null Model’, simulating equal opportunity exchanges.

Sample and Methods We used Monte Carlo simulations with agents starting at equal resource levels, interacting under the rules of each model. Taxation effects were measured through Gini coefficients and Lambda stability scores across various network sizes.

Results Taxation reduced Gini coefficients in both models, promoting more balanced distributions. Lambda values indicated that taxation improved stability, especially within the ‘Winner-Loser Model’, by diminishing extreme resource accumulation.

Conclusions The study demonstrates that while competitive dynamics naturally drive inequality, taxation and redistribution mechanisms can stabilize and reduce disparities. These findings suggest that even simple redistribution can reduce hierarchical resource concentration and counteract extreme inequalities in networked settings.

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