Modeling of Taxation that Considers Reproduction

Tetyana Kravets

doi:10.15388/ekon.2008.17675

Abstract

The article considers the modifications of taxation models that define the influence of tax rate on the production growth and the minimal net margin. The aim of the article is to analyse the development of taxation models that combine total tax allocation and value added, remuneration of labour, amortization.The models generalize the introduction of figurers’, heterogeneity and the production function complication, namely the two-factor production function while considering capital and labour is used. As a result, the estimation of the production growth depending on the tax rate was established, the minimal net margin that allows simple reproduction was defined, the total tax allocation frontier was found.A tax rate optimization model that maximizes allocation to the budget was considered. Calculations for Ukrainian macroeconomic data were conducted. Statistic estimations of the model’s main macroeconomic components allow defining the potential level of the economic growth, comparing it with the actual growth, and concluding on the efficiency of the national development model.

Highlights

The macroeconomic model that combines total tax allocation and value added, remuneration of labour and amortization is built. This model differs from the conceptual taxation models (Kostina, 2002) by a sufficient coordination with the national accounts practice
The model is the generalization of the model proposed by Balatsky (2000), because the heterogeneity of figures is used and the production function is completed by using two factors of production function that consider capital and labour
The optimization approach is used when the tax rate is modelled by maximizing the budget allocation

Summary

Methods

The macroeconomic model that combines total tax allocation and value added, remuneration of labour and amortization is built. . where: Y, - production volume, value added; F, - capital investments in fixed assets; L, -labour; a" a - coefficients of technology and technical progress influence on production. Which depends on the influence of technology and technical progress on the production, on the labour and capital ratio, on the production technology development, on the investment trend, on the fixed assets deterioration and. Let us consider the optimization tax rate problem subject to maxirnization of the budget allocation: on (1+Yk)~max,. The boundary level of total taxes subject to the minimal income margin can be determined by the following ratio:.

G C mca- 1

Conclusions