Experience in Assessing Tax Policy Based on OLG Models

Abstract

In the context of the renewal of the tax system in the Russian Federation from 2025, the topic of assessing the impact of changes in the taxation procedure on the well-being of various groups of the population and society as a whole has become particularly relevant. The article examines the international experience of analyzing the effects of tax policy based on OLG models of overlapping generations, taking into account the level of labor productivity of individuals, their education, wealth and life expectancy. It is shown that the transition to a progressive scale of taxation of personal income necessitates a choice between reducing social inequality and economic growth. Progressive taxation reduces the incentives for high-paid workers to work. An increase in taxes on capital does not contribute to investment and accelerate economic growth, but it can reduce social inequality if the amounts received from additional tax collections are directed to social transfers. The values of the optimal marginal tax rates on income are given, depending on the specific parameters of the chosen taxation model. Taking into account the realities of recent years, it is concluded that the burden on the budget is increasing, forcing the leadership of countries to raise taxes. However, the effectiveness of implementing this measure largely depends on the structure of the redistribution of additional tax revenues, as evidenced by most studies: if in the short term the impact on economic growth from the transition to a progressive tax system is weakly negative, the effect of changing the taxation order in the long term depends entirely on the effectiveness of the redistribution of additional budget revenues.