Assessment of the Redistribution Function of Corporate Income Tax

Purpose: The paper describes the relations between non-uniformity of incomes and possibilities of influencing their diversification through the fulfilment of the redistributive character of taxes. The purpose of this paper is to examine the redistributive function of corporate tax and to assess its progressive character. Methodology: The investigated redistribution function of the selected tax is the analysis of calculations of tax progressivity rate (according to the methodology of M. Kakinaka and R. Pereira, 2007) and Gini coefficients. A cluster analysis evaluates the relation between the progressivity level of the selected tax, the Gini coefficients and selected macroeconomic variables. Approach: The rate of tax progressivity is determined by the tax progressivity index, which is reflected in the level of tax incomes in the period of 2007-2018. The object of interest (corporate income tax) is examined in the EU-28 Member States. We applied the mathematical methods in Excel and R environment by using cluster, NbClust, nFactors, ggdendro and rgdal packages. Findings: The tax progressivity of the corporate income tax can be considered to be progressive in the EU-28 during the reported period. The examined tax has the potential to affect the level of income inequality and thus, by its nature, impact the income diversification. The absolute values of corporate tax incomes in the EU-28 are among the lower, which may, in conjunction with other exogenous variables, partially disrupt the character of this tax. The results of empirical research shows that countries have more often serious income inequalities which are not sufficiently balanced by either a system of benefits and transfers, nor by collection of tax incomes.