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Voting on Redistribution with Tax Evasion

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  • Rainald Borck

Abstract

This paper analyzes voting on a linear income tax which is redistributed lump sum to the taxpayers. Individuals can evade taxes, which leads to penalties if evasion is detected. Since preferences satisfy neither single peakedness nor single crossing, an equilibrium may not exist. When it does exist, it may have interesting properties, in particular, the poor and the rich may form a coalition against the middle class.

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File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.40183.de/dp329.pdf
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Bibliographic Info

Paper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 329.

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Length: 21 p.
Date of creation: 2003
Date of revision:
Handle: RePEc:diw:diwwpp:dp329

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Keywords: Tax evasion; redistribution; voting;

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References

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  1. Slemrod, Joel, 1994. "Fixing the leak in Okun's bucket optimal tax progressivity when avoidance can be controlled," Journal of Public Economics, Elsevier, Elsevier, vol. 55(1), pages 41-51, September.
  2. Yitzhaki, Shlomo, 1974. "Income tax evasion: A theoretical analysis," Journal of Public Economics, Elsevier, Elsevier, vol. 3(2), pages 201-202, May.
  3. Raquel Fernandez & Richard Rogerson, 1994. "On the political economy of education subsidies," Staff Report, Federal Reserve Bank of Minneapolis 185, Federal Reserve Bank of Minneapolis.
  4. Falkinger, Josef, 1991. "On optimal public good provision with tax evasion," Journal of Public Economics, Elsevier, Elsevier, vol. 45(1), pages 127-133, June.
  5. Joel Slemrod & Shlomo Yitzhaki, 2000. "Tax Avoidance, Evasion, and Administration," NBER Working Papers 7473, National Bureau of Economic Research, Inc.
  6. Meltzer, Allan H & Richard, Scott F, 1981. "A Rational Theory of the Size of Government," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 89(5), pages 914-27, October.
  7. Mirrlees, James A, 1971. "An Exploration in the Theory of Optimum Income Taxation," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 38(114), pages 175-208, April.
  8. James Andreoni & Brian Erard & Jonathan Feinstein, 1998. "Tax Compliance," Journal of Economic Literature, American Economic Association, American Economic Association, vol. 36(2), pages 818-860, June.
  9. Epple, Dennis & Romano, Richard E., 1996. "Ends against the middle: Determining public service provision when there are private alternatives," Journal of Public Economics, Elsevier, Elsevier, vol. 62(3), pages 297-325, November.
  10. Alm, James & Sanchez, Isabel & de Juan, Ana, 1995. "Economic and Noneconomic Factors in Tax Compliance," Kyklos, Wiley Blackwell, Wiley Blackwell, vol. 48(1), pages 3-18.
  11. Epple, Dennis & Romano, Richard E, 1996. "Public Provision of Private Goods," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 104(1), pages 57-84, February.
  12. Rainald Borck, 2007. "Voting, Inequality And Redistribution," Journal of Economic Surveys, Wiley Blackwell, Wiley Blackwell, vol. 21(1), pages 90-109, 02.
  13. Jesper Roine, 2006. "The political economics of not paying taxes," Public Choice, Springer, Springer, vol. 126(1), pages 107-134, January.
  14. Rainald Borck, 2002. "Stricter Enforcement May Increase Tax Evasion," Discussion Papers of DIW Berlin 297, DIW Berlin, German Institute for Economic Research.
  15. Roine, Jesper, 1999. "Tax Avoidance, Redistribution and Voting," Research Papers in Economics, Stockholm University, Department of Economics 2000:1, Stockholm University, Department of Economics.
  16. Frank A. Cowell, 1990. "Cheating the Government: The Economics of Evasion," MIT Press Books, The MIT Press, The MIT Press, edition 1, volume 1, number 0262532484, December.
  17. Joel Slemrod, 2007. "Cheating Ourselves: The Economics of Tax Evasion," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 21(1), pages 25-48, Winter.
  18. Feld, Lars P & Tyran, Jean-Robert, 2002. "Tax Evasion and Voting: An Experimental Analysis," Kyklos, Wiley Blackwell, Wiley Blackwell, vol. 55(2), pages 197-222.
  19. Christian Traxler, 2009. "Voting over taxes: the case of tax evasion," Public Choice, Springer, Springer, vol. 140(1), pages 43-58, July.
  20. Allingham, Michael G. & Sandmo, Agnar, 1972. "Income tax evasion: a theoretical analysis," Journal of Public Economics, Elsevier, Elsevier, vol. 1(3-4), pages 323-338, November.
  21. Roberts, Kevin W. S., 1977. "Voting over income tax schedules," Journal of Public Economics, Elsevier, Elsevier, vol. 8(3), pages 329-340, December.
  22. Stigler, George J, 1970. "Director's Law of Public Income Redistribution," Journal of Law and Economics, University of Chicago Press, University of Chicago Press, vol. 13(1), pages 1-10, April.
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Citations

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Cited by:
  1. Rainald Borck, 2005. "Voting, Inequality, and Redistribution," Discussion Papers of DIW Berlin 503, DIW Berlin, German Institute for Economic Research.
  2. Adam, Antonis & Kammas, Pantelis, 2011. "Redistribution through tax evasion," MPRA Paper 34803, University Library of Munich, Germany.
  3. Weinreich, Daniel, 2013. "Fair tax evasion and majority voting over redistributive taxation," MPRA Paper 48919, University Library of Munich, Germany.
  4. Christian Traxler, 2009. "Majority Voting and the Welfare Implications of Tax Avoidance," Working Paper Series of the Max Planck Institute for Research on Collective Goods, Max Planck Institute for Research on Collective Goods 2009_22, Max Planck Institute for Research on Collective Goods.
  5. Besfamille, Martin & De Donder, Philippe & Lozachmeur, Jean-Marie, 2009. "The Political Economy of the (Weak) Enforcement of Sales Tax," CEPR Discussion Papers, C.E.P.R. Discussion Papers 7108, C.E.P.R. Discussion Papers.
  6. Adam, Antonis & Kammas, Pantelis, 2012. "(Tax evasion) power to the people: does "early democratization" increase the size of the informal sector?," MPRA Paper 43343, University Library of Munich, Germany.
  7. Borck, Rainald, 2004. "Stricter enforcement may increase tax evasion," European Journal of Political Economy, Elsevier, Elsevier, vol. 20(3), pages 725-737, September.
  8. Bernasconi, Michele, 2006. "Redistributive taxation in democracies: Evidence on people's satisfaction," European Journal of Political Economy, Elsevier, Elsevier, vol. 22(4), pages 809-837, December.
  9. Bethencourt, Carlos & Kunze, Lars, 2013. "The political economics of redistribution, inequality and tax avoidance," MPRA Paper 51127, University Library of Munich, Germany.

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