Optimal Tax System: Practical and Historical-Economic Aspects

Abstract

The purpose of the article is to analyze the possibilities of developing an optimal tax system from the perspective of the historical evolution of taxation, the practical needs of the economy, and the principles established in classical tax theories, as well as to identify the criteria for assessing the feasibility of its implementation. Particular attention is paid to defining the criteria for evaluating the optimality of a tax system, examining the possibilities for their practical application, and substantiating the factors that determine the feasibility of building an effective tax model under modern conditions.

The article compares classical approaches to optimal taxation with the practical challenges faced by contemporary countries. It analyzes the key criteria of tax system optimality, their practical applicability, and the reasons why different countries develop different taxation models. Through the examination of selected country cases, the study demonstrates that optimality represents a compromise between economic efficiency, equity, public trust, and administrative capacity. The theoretical foundations of the Ramsey model, the Mirrlees model, and the Atkinson–Stiglitz theorem are examined, and the possibilities of their application in modern tax practice are explored. Based on a comparative analysis of the tax systems of Sweden, Estonia, Poland, Germany, Georgia, and Ukraine, the study shows that the concept of tax system optimality is not universal but is formed as a balance between economic efficiency, social equity, institutional trust, the quality of public governance, and tax administration capacity. Particular attention is devoted to the impact of the shadow economy, taxpayers' behavioral characteristics, the level of digitalization of tax administration, and the administrative capacity of the state on the effectiveness of tax system performance. The article formulates the principles for designing the most viable tax system capable of ensuring a balance between fiscal adequacy, the promotion of entrepreneurial activity and investment development, and social justice.

The study concludes that a universally optimal tax system does not exist; instead, only compromise models adapted to a specific institutional environment can be effective. Therefore, tax system optimality should be understood not as a universal formula but as the degree to which a tax system corresponds to the conditions of a particular economy. Prospects for further research include a detailed analysis of the existing gaps in tax incentive studies, the systematization of their evolution, and the assessment of their impact on taxpayers' behavior.