Advanced Search
MyIDEAS: Login to save this paper or follow this series

Poverty and the Optimal General Income Tax-cum-Audit Policy

Contents:

Author Info

  • Marcelo Arbex
  • Enlinson Mattos

Abstract

This paper investigates the optimal general income tax and audit policies when poverty is a public bad and income is not observed in an economy with two types of individuals. Di erently from the traditional "non-distortion at the top" result of the optimal taxation literature, we nd that the optimal marginal income tax rate on skilled individuals is positive when reducing poverty is one of the goals of the social planner and their consumption can affect negatively the poverty measure. Consequently, skilled individuals might be audited stochastically. We characterize a tax regime in which unskilled workers face a negative marginal tax.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: ftp://cpq.fearp.usp.br:2300/textos_discussao/eco/TD-E02-2010.pdf
Our checks indicate that this address may not be valid because: 500 Failed to connect to FTP server cpq.fearp.usp.br: Net::FTP: connect: 10060. If this is indeed the case, please notify (Bruno Vizona Liberato)
File Function: First version, 2010
Download Restriction: no

Bibliographic Info

Paper provided by Universidade de São Paulo, Faculdade de Economia, Administração e Contabilidade de Ribeirão Preto in its series Working Papers with number 02-2010.

as in new window
Length:
Date of creation: 03 Mar 2010
Date of revision:
Handle: RePEc:fea:wpaper:02-2010

Contact details of provider:
Postal: Avenida dos Bandeirantes, 3900 Ribeirão Preto - SP
Phone: (016) 633-5617
Fax: (016) 633-6133
Web page: http://www.cpq.fearp.usp.br/
More information through EDIRC

Related research

Keywords: Poverty; Tax evasion; Optimum Taxation;

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Friedrich Schneider & Robert Klinglmair, 2004. "Shadow Economies around the World: What Do We Know?," CESifo Working Paper Series 1167, CESifo Group Munich.
  2. David Madden, 1999. "Relative or Absolute Poverty Lines - A New Approach," Working Papers 199909, School Of Economics, University College Dublin.
  3. Maloney, William F, 1999. "Does Informality Imply Segmentation in Urban Labor Markets? Evidence from Sectoral Transitions in Mexico," World Bank Economic Review, World Bank Group, vol. 13(2), pages 275-302, May.
  4. Sandmo, Agnar, 1981. "Income tax evasion, labour supply, and the equity--efficiency tradeoff," Journal of Public Economics, Elsevier, vol. 16(3), pages 265-288, December.
  5. Robert A. Moffitt, 2003. "The Negative Income Tax and the Evolution of U.S. Welfare Policy," NBER Working Papers 9751, National Bureau of Economic Research, Inc.
  6. Mookherjee, Dilip & Png, Ivan, 1989. "Optimal Auditing, Insurance, and Redistribution," The Quarterly Journal of Economics, MIT Press, vol. 104(2), pages 399-415, May.
  7. Border, Kim C & Sobel, Joel, 1987. "Samurai Accountant: A Theory of Auditing and Plunder," Review of Economic Studies, Wiley Blackwell, vol. 54(4), pages 525-40, October.
  8. Dominik H. Enste & Friedrich Schneider, 2000. "Shadow Economies: Size, Causes, and Consequences," Journal of Economic Literature, American Economic Association, vol. 38(1), pages 77-114, March.
  9. Cremer, Helmuth & Gahvari, Firouz, 1996. "Tax evasion and the optimum general income tax," Journal of Public Economics, Elsevier, vol. 60(2), pages 235-249, May.
  10. Zheng, Buhong, 2001. "Statistical inference for poverty measures with relative poverty lines," Journal of Econometrics, Elsevier, vol. 101(2), pages 337-356, April.
  11. Marhuenda, Francisco & Ortuno-Ortin, Ignacio, 1997. " Tax Enforcement Problems," Scandinavian Journal of Economics, Wiley Blackwell, vol. 99(1), pages 61-72, March.
  12. Christophe Muller, 2005. "Defining Poverty Lines As A Fraction Of Central Tendency," Working Papers. Serie AD 2005-13, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
  13. Chong, Alberto & Gradstein, Mark, 2006. "Inequality and Informality," CEPR Discussion Papers 5545, C.E.P.R. Discussion Papers.
  14. Sandmo, Agnar, 2005. "The Theory of Tax Evasion: A Retrospective View," National Tax Journal, National Tax Association, vol. 58(4), pages 643-63, December.
  15. Ravi Kanbur & Jukka Pirttilä & Matti Tuomala, 2008. "Moral Hazard, Income Taxation and Prospect Theory," Scandinavian Journal of Economics, Wiley Blackwell, vol. 110(2), pages 321-337, 06.
  16. Steven Shavell & A. Mitchell Polinsky, 2000. "The Economic Theory of Public Enforcement of Law," Journal of Economic Literature, American Economic Association, vol. 38(1), pages 45-76, March.
  17. Simler. Kenneth R. & Arndt, Channing, 2006. "Poverty comparisons with absolute poverty lines estimated from survey data," FCND discussion papers 211, International Food Policy Research Institute (IFPRI).
  18. Chander, Parkash & Wilde, Louis L, 1998. "A General Characterization of Optimal Income Tax Enforcement," Review of Economic Studies, Wiley Blackwell, vol. 65(1), pages 165-83, January.
  19. Kanbur, Ravi & Keen, Michael & Toumala, Matti, 1991. "Optimal non-linear income taxation for the alleviation of income poverty," Policy Research Working Paper Series 616, The World Bank.
  20. Pirttila, Jukka & Tuomala, Matti, 2004. "Poverty alleviation and tax policy," European Economic Review, Elsevier, vol. 48(5), pages 1075-1090, October.
  21. Cremer, Helmuth & Gahvari, Firouz, 1994. " Tax Evasion, Concealment and the Optimal Linear Income Tax," Scandinavian Journal of Economics, Wiley Blackwell, vol. 96(2), pages 219-39.
  22. Gary S. Becker, 1968. "Crime and Punishment: An Economic Approach," Journal of Political Economy, University of Chicago Press, vol. 76, pages 169.
  23. Zeckhauser, Richard J, 1971. "Optimal Mechanisms for Income Transfer," American Economic Review, American Economic Association, vol. 61(3), pages 324-34, June.
  24. Sen, Amartya, 1979. " Issues in the Measurement of Poverty," Scandinavian Journal of Economics, Wiley Blackwell, vol. 81(2), pages 285-307.
  25. Maloney, William, 2003. "Informality revisited," Policy Research Working Paper Series 2965, The World Bank.
  26. Parkash Chander, 1998. "A Stronger Measure of Risk Aversion and a General Characterization of Optimal Income Tax Enforcement," Economics Working Paper Archive 399, The Johns Hopkins University,Department of Economics.
  27. Nichols, Albert L & Zeckhauser, Richard J, 1982. "Targeting Transfers through Restrictions on Recipients," American Economic Review, American Economic Association, vol. 72(2), pages 372-77, May.
  28. Amaral, Pedro S. & Quintin, Erwan, 2006. "A competitive model of the informal sector," Journal of Monetary Economics, Elsevier, vol. 53(7), pages 1541-1553, October.
  29. Friedrich Schneider & Dominik Enste, 2000. "Shadow Economies Around the World," IMF Working Papers 00/26, International Monetary Fund.
  30. Louis Kaplow, 1989. "Optimal Taxation with Costly Enforcement and Evasion," NBER Working Papers 2996, National Bureau of Economic Research, Inc.
Full references (including those not matched with items on IDEAS)

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:fea:wpaper:02-2010. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Bruno Vizona Liberato).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.