Modernization of Tax Administrations and Optimal Fiscal Policies
AbstractSince Sandmo (1981), many articles have analyzed optimal fiscal policies in economies with tax evasion. All share a feature: they assume that the cost of enforcing the tax law is exogenous. However, governments often invest resources to reduce these enforcement costs. In a very simple model, we incorporate such investments in the analysis of an optimal fiscal policy. We characterize their optimal level and we show numerically how they interact with the other dimensions of the optimal fiscal policy. Finally, we highlight the differences between our results and those obtained in a model without investment in the tax administration.
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Bibliographic InfoPaper provided by Universidad Torcuato Di Tella in its series Department of Economics Working Papers with number 2009-07.
Length: 31 pages
Date of creation: Jul 2009
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Tax administration; Tax rates; Tax evasion; Enforcement; Audit costs.;
Other versions of this item:
- Martin Besfamille & Cecilia Parlatore Siritto, 2009. "Modernization of Tax Administrations and Optimal Fiscal Policies," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 11(6), pages 897-926, December.
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion
- H83 - Public Economics - - Miscellaneous Issues - - - Public Administration
This paper has been announced in the following NEP Reports:
- NEP-ACC-2009-09-26 (Accounting & Auditing)
- NEP-ALL-2009-09-26 (All new papers)
- NEP-PBE-2009-09-26 (Public Economics)
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