Can tax evasion tame Leviathan governments?
AbstractThis paper looks at how income tax rates, consumption and public spending respond as venues for tax evasion open or close. The analysis draws on a 16-generation OLG model in which tax rates are determined in a repeated game between voters and a rent-seeking Leviathan government. Key insights are: (1) Effects on any generation alive when change takes place may differ substantially from steady state effects that accrue for generations yet to be born. (2) There is considerable intergenerational diversity in these effects that is not monotonous as we move from young to old. Combined, these results suggest that the political economy of pertinent institutional change may be quite complex.
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Bibliographic InfoArticle provided by Springer in its journal Public Choice.
Volume (Year): 136 (2008)
Issue (Month): 1 (July)
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Web page: http://www.springerlink.com/link.asp?id=100332
Leviathan government; Income tax; Tax evasion; Public spending; Rent seeking;
Other versions of this item:
- Manfred Gärtner & Frode Brevik, 2006. "Can tax evasion tame Leviathan governments?," University of St. Gallen Department of Economics working paper series 2006 2006-19, Department of Economics, University of St. Gallen.
- E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
- F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission
- H2 - Public Economics - - Taxation, Subsidies, and Revenue
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