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Modernization of Tax Administrations and Optimal Fiscal Policies

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  • Martin Besfamille

    ()

  • Cecilia Parlatore Siritto

Abstract

Since 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 Info

Paper provided by Universidad Torcuato Di Tella in its series Department of Economics Working Papers with number 2009-07.

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Length: 31 pages
Date of creation: Jul 2009
Date of revision:
Handle: RePEc:udt:wpecon:2009-07

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Web page: http://www.utdt.edu/ver_contenido.php?id_contenido=439&id_item_menu=568
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Related research

Keywords: Tax administration; Tax rates; Tax evasion; Enforcement; Audit costs.;

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References

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Cited by:
  1. Wrede, Matthias, 2013. "Rational choice of itemized deductions," IWQW Discussion Paper Series 01/2013, Friedrich-Alexander-Universität Erlangen-Nürnberg, Institut für Wirtschaftspolitik und Quantitative Wirtschaftsforschung (IWQW).

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