Sound taxation? On the use of self-declared value
Abstract
In the 16th century, foreign ships passing through the Sound had to pay ad valorem taxes, known as the Sound Dues. To give skippers an incentive to declare the true value of their cargo, the Danish Crown reserved the right to purchase it at the declared value. We show that it is an equilibrium for the authorities to confiscate the cargo with some fixed probability independent of the declared value. This does not induce truth-telling, but does generate the desired tax revenue. Other applications of this framework include the dissolution of partnerships, and the auditing of income tax returns.Download Info
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Paper provided by Universiteit van Amsterdam, Center for Nonlinear Dynamics in Economics and Finance in its series CeNDEF Working Papers with number 08-02.
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Date of creation: 2008
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Handle: RePEc:ams:ndfwpp:08-02
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Related research
Keywords:This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-06-21 (All new papers)
- NEP-PBE-2008-06-21 (Public Economics)
- NEP-PUB-2008-06-21 (Public Finance)
References
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- Jeffrey C. Ely & Kim-Sau Chung, 2004.
"Foundations of Dominant Strategy Mechanisms,"
Econometric Society 2004 North American Summer Meetings
169, Econometric Society.
- Kim-Sau Chung & J.C. Ely, 2007. "Foundations of Dominant-Strategy Mechanisms," Review of Economic Studies, Wiley Blackwell, vol. 74(2), pages 447-476, 04.
- Kim-Sau Chung & Jeffrey C. Ely, 2003. "Foundations of Dominant Strategy Mechanisms," Discussion Papers 1372, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Jeff Ely, 2003. "Foundations of Dominant Strategy Mechanisms," Theory workshop papers 658612000000000064, UCLA Department of Economics.
- Andrew Odlyzko, 2004. "The Evolution of Price Discrimination in Transportation and its Implications for the Internet," Review of Network Economics, Berkeley Electronic Press, vol. 3(3), pages 4.
- Benny Moldovanu, 2002. "How to Dissolve a Partnership," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 158(1), pages 66-, March.
Citations
Blog mentions
As found by EconAcademics.org, the blog aggregator for Economics research:- Intangible tax proposal - further thoughts
by Ken Jarboe in The Intangible Economy on 2009-05-15 12:18:12
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