The effect of corporate income tax on the welfare of households with the CGE approach (Case study: Iran's economy)

Taxes are one of the most important financial policy tools and can help the government to ensure people's welfare. Therefore, in this study, the effect of increasing and decreasing corporate income tax on the welfare of urban and rural households has been investigated. To investigate the impact of the mentioned tax changes on the welfare of households at the macro level, the method of the standard calculable general equilibrium model has been used. To estimate the general balance model, the social accounting matrix of Iran 2013 was used. The model has been solved using GAMS software in two scenarios that include increasing and decreasing corporate taxes. In order to check the welfare of the household, the index of equivalent changes has been used. The findings indicate that in the first scenario, with the application of 10, 20 and 50 percent increase in corporate tax, the welfare of urban households decreases, but the welfare of rural households increases slightly.The welfare of all households decreases in these scenarios. In the second scenario, with the reduction of this tax in the previous three cases, the welfare of the urban household increases and the rural household experiences a slight decrease in welfare,