Mathematical modelling of optimal tax trajectory within the framework of Cobb-Douglas model

ABSTRACT

A mathematical model for calculating the optimal tax path for the effective functioning of companies is developed. The model is based on the principle of the distribution of fixed assets between consumption, investment and taxes. The governing principle of distribution is the maximization of output, which is a key criterion for the desired tax path. As a result of numerical modelling, an approach is proposed for formulating the optimal tax rate, which allows, on the one hand, to increase tax collection, and on the other, to ensure the continuous development of companies. Since the model is obtained on the basis of the fundamental principles of economics and the physics of evolutionary processes, it is expected to expand to foreign practices.

KEYWORDS:

• Mathematical model
• tax
• optimal trajectory
• Cobb-Douglas model
• production function

JEL CLASSIFICATION:

• C00
• C22
• C32
• C52

Disclosure statement

No potential conflict of interest was reported by the authors.

Additional information

Funding

The study reported was funded by the Grant of President of Russian Federation («Theoretical research of the taxation for large Russian companies in the conditions of instability market of commodity turnover for increase in competitiveness of national economy»), project No. МК-3443.2017.6.