Estimating the optimal size of the tax burden in Jordan using the Laffer curve During the period (2020-1980).

Authors

Saleh Yahya Al-Freijat, The University of JordanFollow

Abstract

This study aims to measure the optimal tax burden of the Jordanian economy using time series data from 1980 to 2020. Laffer curve was utilized to measure the optimal size of tax revenues in Jordan, the optimal size of income tax and the current tax burden compared to the optimal size of tax. To this end, a standard model was used to estimate Laffer curve and a fully modified ordinary least squared model (FMOLS) was used to estimate the parameters. The results indicated that the current tax rates are lower than their optimal size. Income tax levels in Jordan are also lower than international levels, whereas the tax burden is relatively higher. The study recommended that the government can increase its income from income tax and profits by increasing the actual rates to be closer to the optimal rates. The study also recommended that the actual rates have to be increased differently across sectors, since decision-makers in Jordan are increasingly paying more attention to industrial sectors.

Recommended Citation

Al-Freijat, Saleh Yahya (2021) "Estimating the optimal size of the tax burden in Jordan using the Laffer curve During the period (2020-1980).," Al-Balqa Journal for Research and Studies البلقاء للبحوث والدراسات: Vol. 24: Iss. 2, Article 9.
Available at: https://digitalcommons.aaru.edu.jo/albalqa/vol24/iss2/9