Mathematical Simulation Modeling of the Income Taxation System with the Use of Tukey’s Q-Test

Abstract

The study deals with the development of a mathematical simulation models for the income taxation system. The paper uses general scientific research methods (analysis, synthesis), mathematical simulation modeling techniques and substantiation of statistical hypotheses. This comprehensive approach is carried out in two stages; this fact distinguished our present study from previously published works on the subject. Flat personal income tax rate is assumed as a basic condition of the system. An effective system of income taxation should take into account two mandatory conditions. The first condition relates to the budget and consists in the non-reduction of tax revenues of the consolidated budget of the Russian Federation. The second – social – condition is to eliminate excessive social inequality in the first five decile groups of citizens by income. In order to fulfill the first condition, we create a mathematical simulation model, which includes non-taxable minimum and tax deductions. In order to comply with the second condition, we propose to use Tukey’s q-test, which allows us to assess the degree of social inequality not only in the extreme deciles, but also in their pairwise comparison. We determine that the social condition can be tested with the use of the least significant differences (LSD). In conclusion, we note that our model can be used in the absence of budget constraints. Besides, we propose further directions to develop the methodology and create a system of differential equations that take into account tax, labor and other legislation

Keywords

• social inequality
• income taxation
• mathematical simulation modeling
• tukey’s q-test
• mathematical model
• flat-rate taxation system
• model conditions