The majority and optimization harmonization of justice and efficiency of citizens and production taxation

Abstract

A majority and optimization approach to the formalized harmonization of justice and efficiencyof citizens and production taxation is provided in this paper. The principal peculiarities of such approach include, first, introducing the new versions of specification and model formalization of notions of concepts of justice and efficiency of taxation, second, creation of theoretical models of optimization of citizens and production taxation, relative to them. The concept of genic and cultural rent, which is the essential part of incomes from the working and entrepreneurial activities. Its partial exemption is implied by means of progressive taxes. In order to ensure justice of distribution, the minimization of tax payments of their majority with low, middle and relatively high incomes is deemed as a criterion of optimality of individual taxation. Meanwhile, to allow for the economic interests of minority of individuals with very high incomes the constraints on the maximum possible values of tax rates on the incomes, property and consumption are imposed, in order to enable them to benefit from living in their own country. The optimization of production taxation is executed by means of maximization of the sum of the values added of all the enterprises under the constraints on the total tax payments of citizens and enterprises,as well as on the values of tax rates. As a result, the economy, all things being equal, enters the frontier of production possibilities, which makes the necessary tax conditions of efficiency of doing business in one's own country. The proposed majority and optimization approach form the theoretical conditions of formalized harmonization of justice of individual taxation and the efficiency of production taxation.