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Abstract

This study examines the relationship between key macroeconomic indicators and optimal tax revenue generation in the United States, with a focus on their implications for fiscal sustainability. The research explores the effects of interest rates, consumer price index (CPI), Real Gross Domestic Product (GDP), and unemployment rates on total tax revenue hence providing an empirical assessment of how these variables influence the stability and efficiency of tax collection. The research therefore aims to assess how fluctuations in these economic variables influence the federal government's ability to sustain fiscal balance and generate adequate tax revenue for socio-economic development. Notably, the research would explore the responsiveness of tax revenue generation to changes in monetary and fiscal policy measures. This study leverages historical data and econometric modeling by identifying trends in tax revenue responsiveness to economic changes hence offering insights into policy measures that enhance fiscal resilience. The findings shall contribute to the ongoing discourse on tax policy optimization by highlighting strategies that balance revenue sufficiency with economic stability. The study also aims to provide recommendations for tax policy reforms that enhance revenue stability while fostering an environment conducive to economic expansion. The research would emphasize the necessity of a balanced approach in designing tax policies that respond effectively to macroeconomic shifts hence ensuring long-term fiscal sustainability. This research would hence serve as a valuable resource for policymakers, economists, and tax authorities seeking data-driven approaches to strengthening the U.S. tax system's role in long-term fiscal sustainability.
Keywords: Revenue Optimization, Fiscal Sustainability, Macroeconomic Indicators, Economic Stability, Consumer Price Index, GDP, Interest rate, Unemployment.