The Distributional Component of the Price of the Tax Avoidance Service
AbstractThe traditional avoidance literature undeservedly neglects tax base distribution as a factor affecting the avoidance price, and generally assumed to be equal to the avoidance cost. In reality, avoidance providers are usually either high-skilled specialists or insiders. The strong collusion thus, naturally seems to be an assumption of the behavior of avoidance providers. Within such a framework, income distribution, which forms an avoidance demand together with tax codes, plays a very essential roll for the outcome of both avoidance price and quantity. My article models an economy with a monopolistic avoidance provider and imperfect information, and illustrates possible consequences of tax base changes. The paper examines the relationship between inequality and a government's ability to collect tax revenue, and also considers the possible outcome of a tax base broadening. Furthermore, it provides an additional explanation for the secession decision.
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Bibliographic InfoPaper provided by Stockholm School of Economics in its series Working Paper Series in Economics and Finance with number 0454.
Length: 40 pages
Date of creation: 05 Jul 2001
Date of revision: 03 Dec 2001
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Tax avoidance; optimal taxation; income distribution; endogenous prices; inequality; tax base broadening; secession.;
Find related papers by JEL classification:
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
- D42 - Microeconomics - - Market Structure and Pricing - - - Monopoly
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
- D69 - Microeconomics - - Welfare Economics - - - Other
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
- E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes
- F15 - International Economics - - Trade - - - Economic Integration
- G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
- G29 - Financial Economics - - Financial Institutions and Services - - - Other
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
- H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
- H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
- H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
- H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
- J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
- K34 - Law and Economics - - Other Substantive Areas of Law - - - Tax Law
- L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
- O17 - Economic Development, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
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- Damjanovic, Tatiana & Ulph, David, 2010.
"Tax progressivity, income distribution and tax non-compliance,"
European Economic Review,
Elsevier, vol. 54(4), pages 594-607, May.
- Tatiana Damjanovic & David Ulph, 2007. "Tax Progressivity, Income Distribution and Tax Non-Compliance," Discussion Paper Series, Department of Economics 200712, Department of Economics, University of St. Andrews.
- Tatiana Damjanovic & David Ulph, 2009. "Tax Progressivity, Income Distribution and Tax Non-Compliance," Working Papers 0928, Oxford University Centre for Business Taxation.
- Tatiana Damjanovic, 2005. "Does More Progressive Tax Make Tax Discipline Weaker?," CRIEFF Discussion Papers 0506, Centre for Research into Industry, Enterprise, Finance and the Firm.
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