Evasion and Time Consistency in the Taxation of Capital Income
AbstractEvasion and time inconsistency have been prominent concerns in recent discussions capital income taxation, both theoretical and applied. This paper establishes a link between them, suggesting a potentially useful role for evasion additional to those previously identified: by committing to relatively tax enforcement, the government may be able to alleviate the welfare loss implied by its inability to commit to the tax rate. The scope for this role proves strikingly wide: it is optimal for the government to facilitate the evasion of the capital income taxes that it chooses to impose whenever the time consistent tax rate exceeds that which would be optimal if the government could commit to it.
Download InfoIf 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.
Bibliographic InfoPaper provided by Queen's University, Department of Economics in its series Working Papers with number 890.
Length: 24 pages
Date of creation: Oct 1993
Date of revision:
Other versions of this item:
- Boadway, Robin & Keen, Michael, 1998. "Evasion and Time Consistency in the Taxation of Capital Income," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(2), pages 461-76, May.
- Robin Boadway & Michael Keen, 1993. "Evasion and time consistency in the taxation of capital income," IFS Working Papers W93/20, Institute for Fiscal Studies.
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
- H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion
- H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Konrad, Kai A, 1999.
"Privacy, Time Consistent Optimal Labour Income Taxation and Education Policy,"
CEPR Discussion Papers
2326, C.E.P.R. Discussion Papers.
- Konrad, Kai A., 1999. "Privacy, time consistent optimal labor income taxation and education policy," IZA Discussion Papers 82, Institute for the Study of Labor (IZA).
- Winand Emons, 2002.
"Subgame Perfect Punishment for Repeat Offenders,"
dp0211, Universitaet Bern, Departement Volkswirtschaft.
- Selim, Sheikh, 2006.
"On Policy Relevance of Ramsey Tax Rules,"
Cardiff Economics Working Papers
E2006/19, Cardiff University, Cardiff Business School, Economics Section, revised Jul 2006.
- Robin Boadway & Motohiro Sato, 2000. "The Optimality of Punishing Only the Innocent: The Case of Tax Evasion," International Tax and Public Finance, Springer, vol. 7(6), pages 641-664, December.
- Pirttilä, Jukka, 1999. "Tax Evasion and Economies in Transition: Lessons from Tax Theory," BOFIT Discussion Papers 2/1999, Bank of Finland, Institute for Economies in Transition.
- Konrad, Kai A. & Erik Lommerud, Kjell, 2001.
"Foreign direct investment, intra-firm trade and ownership structure,"
European Economic Review,
Elsevier, vol. 45(3), pages 475-494, March.
- Konrad, K.A. & Lommerud, K.E., 2001. "Foreign Direct Investment, Intra-firm Trade and Ownership Structure," Norway; Department of Economics, University of Bergen 219, Department of Economics, University of Bergen.
- Frode Brevik & Manfred Gärtner, 2008.
"Can tax evasion tame Leviathan governments?,"
Springer, vol. 136(1), pages 103-122, July.
- Manfred Gärtner & Frode Brevik, 2006. "Can tax evasion tame Leviathan governments?," University of St. Gallen Department of Economics working paper series 2006 2006-19, Department of Economics, University of St. Gallen.
- Konrad, Kai A., 2001. "Privacy and time-consistent optimal labor income taxation," Journal of Public Economics, Elsevier, vol. 79(3), pages 503-519, March.
- Alexander Haupt & Eckhard Janeba, 2004.
"Education, Redistribution, and the Threat of Brain Drain,"
NBER Working Papers
10618, National Bureau of Economic Research, Inc.
- Alexander Haupt & Eckhard Janeba, 2009. "Education, redistribution and the threat of brain drain," International Tax and Public Finance, Springer, vol. 16(1), pages 1-24, February.
- Bethencourt, Carlos & Kunze, Lars, 2013. "Tax evasion, social norms and economic growth," MPRA Paper 48427, University Library of Munich, Germany.
- Dan Anderberg & Carlo Perroni, .
"Renegotiation of Social Contracts by Majority Rule,"
EPRU Working Paper Series
00-15, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
- Anderberg, D. & Perroni, C., 2000. "Renegotiation of Social Contracts by Majority Rule," The Warwick Economics Research Paper Series (TWERPS) 566, University of Warwick, Department of Economics.
- Pääkkönen, Jenni, 2008. "Optimal Law Enforcement and Welfare in the Presence of Organized Crime," BOFIT Discussion Papers 30/2008, Bank of Finland, Institute for Economies in Transition.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Babcock).
If references are entirely missing, you can add them using this form.