Relationship between tax types and income distribution: An econometric analysis

While taxes, which have a significant share in the financing of public expenditures, were only public revenues until the Great Depression of 1929, after 1929 they turned into a fiscal policy tool that the state effectively used to intervene in the economy. Over time, the duties imposed on taxes increased; Taxes have become an important economic element in achieving financial, economic and social goals. Income inequality has increased worldwide since the 1990s and has become a global problem. Eliminating inequality in income distribution and ensuring income redistribution has been one of the most important social goals of taxes. In this context, in the study, the issue of the income distribution, which has become a problem that concerns all countries' economies and is one of the issues that decision-makers focus on and seek solutions to the most, is discussed and the relationship between tax types and income distribution is examined. Therefore, this research aims to analyze the relationship between tax types and income distribution in different country groups, including developed and developing countries, in the period between 2000 and 2019. In the first stage of the study, in which Phillips and Sul (2007) club convergence analysis method was used, the shares of taxes on goods and services, income and foreign trade in total tax revenues for 50 selected countries and the degree of convergence of the countries were examined using Gini coefficient data. In the second stage of the empirical analysis, the relationship between tax types and income distribution in the 2000-2019 period in the first, second and third club countries, obtained using the club convergence analysis method, was examined with the panel data analysis method and in the said method, cross-section dependence test, slope homogeneity test, CIPS unit root test, PMG_ ARDL estimator and Dumitrescu-Hurlin causality test were applied. According to the study's findings, the increase in tax revenues in the first, second and third club countries in the long term affects the Gini coefficient negatively and statistically significantly. In addition, the increase in inflation rates included in the model as a control variable affects the Gini coefficient positively and statistically significantly in the first, second and third club countries.