Kakaulina, M. O., Tsepelev, O. A., Latkin, A. P. Modeling the Influence of Tax Burden on the Economic Growth of a Region Taking Into Account Resource Potentials

Abstract: The article concerns the evaluation of the optimal tax burden in relation to the economic growth at the regional level. The majority of existing models for evaluating the influence of tax burden on the economic growth has significant drawbacks. Moreover, these models are not always suitable for the regional level because they do not take into account territorial peculiarities. Therefore the purpose of the present research article is to develop a methodological tool for evaluating the influence of tax burden on the economic growth at the regional level. Theoretical, methodological and empirical research base includes the theory of Laffer curve and data collected by the Russian Federation Ministry of Agriculture, Ministry of Natural Resources and the Environment of the Russian Federation, Russian Federal State Statistics Service, Federal Tax Service and the Federal Portal PROTOWN.RU. The authors offer a classification of the Russian Federation regions depending on their resource potential. According to this classification, regions can be divided into the two groups: regions that have natural resources potentials and regions that have innovative potentials. Taking into account this classification, the authors have developed their own model for evaluating the influence of tax burden on a region’s economic growth and tested their model in the economic environment of Russian regions. The model is based on the linear non-homogeneity of the production function. The given model allows to calculate the optimal tax burden and to define regular patterns of the influence of tax burden on the economic growth in the California state as well as to make suggestions on how the effective tax legislation could be improved. The tools developed by the author allow to draw attention of the state authorities to the regional level and to create the tax burden that would encourage production activity while retaining the necessary level of refilling of the country’s consolidated budget.

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