The effect of zakat on income distribution in Iran Comparison of current methods with parametric and non parametric methods

Inappropriate distribution of income and poverty is one of the problems of human societies and many studies have been conducted to find a solution to this issue. But in these studies, less attention has been paid to the impact of Islamic taxes on income distribution. Therefore, in this study, by calculating the Gini coefficient of society using macroeconomic data for the period of 2000 to 2016 and estimating the gini coefficient of the sample Using detailed data of household income through parametric and nonparametric methods, the effect of zakat (potential) on improvement of the distribution of income has been investigated. In this regard, after calculating the amount of zakat (potential) in Iran, its assumed distribution among the first decile of income in Iran was investigated and ultimately its impact on income distribution was studied. The results of the application of parametric and nonparametric methods with households' micro data indicate a decrease of 2.1% in the Gini coefficient due to Zakat. The results of estimating the Gini coefficient by regression method also indicate a 3% decrease in the coefficient due to the distribution of zakat in the economy. Therefore, Zakat reduces the Gini coefficient and moves the community towards the Pareto's situation (according to the contract curve), thereby increasing social welfare (utility of society).