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Tax Avoidance, Endogenous Social Norms, and the Comparison Income Effect Author info | Abstract | Publisher info | Download info | Related research | Statistics Alessandro Balestrino (University of Pisa)
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We present a model of income tax avoidance with heterogenous agents, assuming the presence of a comparison income effect and of a psychic cost (disutility) of tax dodging. We analyse the policy preferences of the agents, and identify a median-voter political equilibrium. Paralleling previous results in the optimal taxation literature, we show that the comparison income effect calls for a high degree of progressivity of the income tax; additionally, we find that this tendence is strenghtened by the psychic cost of avoidance. We then investigate the source of the stigma attached to the act of avoidance and find that such stigma is motivated by the desire to make redistribution more effective, and that it is enhanced by the income comparison effect.
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Paper provided by Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics in its series EPRU Working Paper Series with number
05-15.
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Length: 16 pages
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Dec 2005Handle: RePEc:kud:epruwp:05-15Contact details of provider: Postal: Øster Farimagsgade 5, Building 26, DK-1353 Copenhagen K., Denmark Phone: (+45) 3532 4411 Fax: +45 35 32 30 00 Web page: http://www.econ.ku.dk/epru/ More information through EDIRC
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Paper Alessandro Balestrino, 2009.
"Tax avoidance, endogenous social norms, and the comparison income effect ,"
CHILD Working Papers
wp15_09, CHILD - Centre for Household, Income, Labour and Demographic economics - ITALY.
[Downloadable!] Alessandro Balestrino, 2006.
"Tax Avoidance, Endogenous Social Norms, and the Comparison Income Effect ,"
CESifo Working Paper Series
CESifo Working Paper No. , CESifo Group Munich.
[Downloadable!] This paper has been announced in the following NEP Reports :
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1997:28, Uppsala University, Department of Economics.
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repec:cup:cbooks:9780521891073 is not listed on IDEAS
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2006-10, Center for Research in Economics, Management and the Arts (CREMA).
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references Cited by : (explanations , 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.)
Alessandro Balestrino, 2007.
"It is a Theft but not a Crime ,"
CESifo Working Paper Series
CESifo Working Paper No. , CESifo Group Munich.
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Other versions: Micheletto, Luca, 2009.
"Optimal nonlinear redistributive taxation and public good provision in an economy with Veblen effects ,"
Working Paper Series
2009:3, Uppsala University, Department of Economics.
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