Optimal Sales Tax Rebates and Tax Enforcement Consumers
AbstractWe study an optimal commodity taxation problem and show that consumers have an important role as tax enforcers. Firms evade taxes by not issuing sales receipts. Requesting receipts is costly for buyers but forces ?rms to remit taxes to the government. To compensate buyers, the government o¤ers a tax rebate, which has a non-trivial income e¤ect and modi?es the traditional "Ramsey equation". Tax-enforcement policies a¤ect buyers?allocations directly and via the standard changes in the good?s price. The optimal policies depend on buyers? auditing and ?rms?concealment technologies. Welfare is higher if consumer auditing is the only tax enforcement policy.
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Bibliographic InfoPaper provided by University of Windsor, Department of Economics in its series Working Papers with number 1302.
Length: 28 pages
Date of creation: Apr 2013
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Optimal Taxation; Indirect Tax Evasion; Tax Enforcement and Auditing.;
Find related papers by JEL classification:
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
- H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion
- K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-04-27 (All new papers)
- NEP-IUE-2013-04-27 (Informal & Underground Economics)
- NEP-MAC-2013-04-27 (Macroeconomics)
- NEP-PBE-2013-04-27 (Public Economics)
- NEP-PUB-2013-04-27 (Public Finance)
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