The Effect of Changing the Tax System on Macroeconomic Variables with the System Dynamics Approach

Tax revenues are superior to other sources of income from the domestic economy for many reasons, including the ability to control them. The current state of Iran's economy and the imposed economic sanctions, as well as the instability of oil prices and oil revenues, have led to the non-realization of government revenue programs, and if such a trend continues in the long run, the country will face an economic crisis. One of the challenges of not implementing these programs is the unexpected behaviors that the economic system manifests itself over time. In this dissertation, a system dynamics approach that is able to display a multi-loop and multi-state structure and can model nonlinear feedback and time delays has been selected as a modeling tool. The impact of tax system reform on macroeconomic variables using a dynamic system approach. The main objective of this article is to examine the variables of the tax system on macroeconomic variables such as inflation rate, unemployment rate, and gross domestic product growth rate, and to provide a model for increasing tax revenue that leads to the selection of the best strategy for improving tax revenue. To achieve this, causal loops and stock-flow diagrams were first drawn for a ten-year period (1395-1404), and then the validity of the constructed model was tested for its dynamism. After simulating the model and analyzing the applied policies, finally, 23 strategies to improve the tax system are presented, which adopt each strategy that affects the performance of the tax system and some macroeconomic variables. Economic managers, based on the country's economic conditions and their valuable human resources, can adopt appropriate strategies and provide the conditions for improving the economic situation, including the country's financial revenues.