Income Tax Modeling with Comparative Elements: A Case Study of Armenia and Belarus

This research discusses methods for estimating tax revenues to the state budget using mathematical modeling and forecasting tools. Relevant economic and mathematical calculations have shown that the volume of tax revenues can be considered as a mathematical expectation of the volume of tax collected as a result of the application of tax legislation. The impact of changes in certain tax rates on the volume of tax revenues is considered. Income is usually considered a deterministic quantity. However, it is also possible to consider income a random quantity distributed according to some law and represent it with a probability distribution law, which is a mathematical model characterizing the structure of income. And if in that model the average income and/or its dispersion change over time, then we can obtain a dynamic model of the income structure, which makes it possible to solve a variety of problems and make predictions. The article discusses the forecast of tax revenues of the state budget, showing that the volume of tax revenues can be represented as a mathematical expectation of revenues arising from the tax law. As a result, with new taxation rates, new divisions of the tax base scale, and rate adjustments in coming years, the Republic of Armenia implemented a new income tax on January 1, 2021, instead of the former income tax rates. The implementation of the new tax law had a substantial impact on state budget revenue quantities, which could only be accurately assessed and forecast by mathematical modeling and study. For comparison, the distribution of income in the Republic of Belarus, the impact of changes in income tax rates, and a forecast of the volume of income to the state budget from the income tax were also analyzed. Belarus was selected as a comparative country due to its similar economic background and the availability of detailed and diverse statistical data relevant to income taxation and modeling.