Adam, Antonis and Kammas, Pantelis (2012): Redistribution through tax evasion.
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Using a simple model of income redistribution, we examine the effect of income inequality on redistribution in the presence of tax evasion. Our results suggest that in the presence of tax evasion, a political equilibrium may be characterized by inefficiently high tax rate, i.e. higher than the revenue maximizing tax rates. Moreover in contrast to the conventional wisdom higher income inequality may be associated with lower redistribution. This is because in countries with weak institutional framework political parties may increase the probability of winning the elections by choosing policies that expand the number of tax evading individuals.
|Item Type:||MPRA Paper|
|Original Title:||Redistribution through tax evasion|
|Keywords:||redistribution, inequality, tax evasion|
|Subjects:||H - Public Economics > H1 - Structure and Scope of Government > H10 - General
H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H23 - Externalities ; Redistributive Effects ; Environmental Taxes and Subsidies
H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H26 - Tax Evasion and Avoidance
|Depositing User:||Pantelis Kammas|
|Date Deposited:||04. May 2012 12:34|
|Last Modified:||12. Feb 2013 00:29|
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Available Versions of this Item
Redistribution through tax evasion. (deposited 17. Nov 2011 14:26)
Income inequality and redistribution: the role of tax evasion. (deposited 11. Apr 2012 13:37)
- Redistribution through tax evasion. (deposited 04. May 2012 12:34) [Currently Displayed]
- Income inequality and redistribution: the role of tax evasion. (deposited 11. Apr 2012 13:37)