Stricter Enforcement May Increase Tax Evasion
AbstractThis paper shows that stricter enforcement may increase tax evasion. Individuals vote on a linear income tax which is used to finance lump sum transfers. Stricter enforcement may make redistributive taxation more attractive to the decisive voter. The tax rate and transfer may rise which in turn may increase tax evasion. An example shows that this result can actually occur. The paper also discusses the interaction between voting on taxes and the choice of audit rate by a budget maximizing bureaucrat.
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Bibliographic InfoPaper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 297.
Length: 16 p.
Date of creation: 2002
Date of revision:
Tax evasion; enforcement; voting;
Other versions of this item:
- H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion
- D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-08-16 (All new papers)
- NEP-PUB-2004-08-31 (Public Finance)
- NEP-REG-2004-08-16 (Regulation)
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