Tax Avoidance, Redistribution and Voting
AbstractThe main question addressed in this paper is how the possibility of investing in tax avoidance affects voting and redistributive outcomes in an economy where the tax rate is determined by a majority vote and taxes go to lump-sum redistribution. The outcome depends on the timing and efficiency of tax avoidance. It is shown that in all cases those who invest in tax avoidance pay proportionally less in taxes than others. Politically two cases can be distinguished. One where the population is divided accordingly to income and the median income earner is decisive, and one where the most affluent form a coalition with those with low income and the decisive voter has lower than median income.
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Bibliographic InfoPaper provided by Stockholm University, Department of Economics in its series Research Papers in Economics with number 2000:1.
Length: 29 pages
Date of creation: 27 Nov 1999
Date of revision:
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Postal: Department of Economics, Stockholm, S-106 91 Stockholm, Sweden
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Tax Avoidance; Redistribution; Voting;
Find related papers by JEL classification:
- D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
- H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
- H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
- H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
This paper has been announced in the following NEP Reports:
- NEP-ALL-2000-05-16 (All new papers)
- NEP-CDM-2000-05-16 (Collective Decision-Making)
- NEP-MIC-2000-05-16 (Microeconomics)
- NEP-PBE-2000-05-16 (Public Economics)
- NEP-POL-2000-05-16 (Positive Political Economics)
- NEP-PUB-2000-05-16 (Public Finance)
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- Rainald Borck, 2003.
"Voting on Redistribution with Tax Evasion,"
Discussion Papers of DIW Berlin
329, DIW Berlin, German Institute for Economic Research.
- Borck, Rainald, 2004.
"Stricter enforcement may increase tax evasion,"
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Elsevier, vol. 20(3), pages 725-737, September.
- Henrekson, Magnus & Jakobsson, Ulf, 2001.
"The Transformation of Ownership Policy and Structure in Sweden: Convergence towards the Anglo-Saxon Model?,"
Working Paper Series in Economics and Finance
469, Stockholm School of Economics, revised 19 Sep 2002.
- Henrekson, Magnus & Jakobsson, Ulf, 2001. "The Transformation of Ownership Policy and Structure in Sweden: Convergence towards the Anglo-Saxon Model?," Working Paper Series 566, Research Institute of Industrial Economics.
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