Open Access

Seyed Omid Tayebi Jazayeri, Karim Abou Dargham

• The relevance of corporate taxation in the context of redistribution has recently been undermined, meanwhile, income and wealth inequality are globally on the rise. Profit shifting, tax avoidance, deductions, and exemptions in current international tax practices have contributed to lower tax revenues worldwide, splitting the consideration of corporate tax rates into two: statutory vs effective. In light of this, this thesis examines the relationship between corporate taxation and social inequality. The effects of statutory and effective tax rates on both income and wealth inequality (measured by their respective Gini-coefficients) are compared. A panel data regression model was carried out using SPSS. The model was applied to a selection of 10 OECD countries, spanning over a 6-year period from 2017 to 2022. The regression model indicates a significant relationship between income inequality (income Gini-coefficient) and the two corporate tax rates (estimates of -0.332 for statutory and -0.311 for effective). However, a significant relationship between wealth inequality (wealth Gini-coefficient) and the two tax rates was not identified. In addition, limitations regarding heteroscedasticity, potential endogeneity issues, and the small data set were addressed in detail but not completely ruled out. Implications include the effectiveness of progressive corporate taxation as a redistributive tool in the case of income inequality and the investigation of alternative taxes for tackling wealth inequality. The need for policies that push for easier attainment of data on wealth inequality is crucial for future research on the matter.