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Imperfect Tax Compliance and the Optimal Provision of Public Goods

Author

Listed:
  • Alessandro Balestrino

    (University of Pisa, and ChilD, Turin, Italy)

  • Umberto Galmarini

    (University of Insubria, Como, and Catholic University of Milan, Italy)

Abstract

Our aim in this paper is to investigate whether the presence of imperfect income tax compliance affects the optimal provision of public goods within a framework in which public expenditure is financed by a general income tax that also accomplishes redistributive goals. We first derive the income tax structure, and then a generalized Samuelson rule. We argue that, under imperfect income tax compliance, it is desirable to distort public--good supply downwards, in the sense that the sum of marginal rates of substitution between public and private consumption must exceed their marginal rate of transformation. Copyright Blackwell Publishing Ltd and the Board of Trustees of the Bulletin of Economic Research 2003

Suggested Citation

  • Alessandro Balestrino & Umberto Galmarini, 2003. "Imperfect Tax Compliance and the Optimal Provision of Public Goods," Bulletin of Economic Research, Wiley Blackwell, vol. 55(1), pages 37-52, January.
  • Handle: RePEc:bla:buecrs:v:55:y:2003:i:1:p:37-52
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    Citations

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    Cited by:

    1. Balestrino, Alessandro, 2010. "Tax avoidance and the endogenous formation of social norms," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 39(5), pages 601-609, October.
    2. Alessandro Balestrino, 2012. "Kind of Black: The Musicians' Labour Market in Italy," LABOUR, CEIS, vol. 26(4), pages 472-491, December.
    3. Alessandro Balestrino, "undated". "Tax Avoidance, Endogenous Social Norms, and the Comparison Income Effect," EPRU Working Paper Series 05-15, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics, revised Dec 2005.
    4. Laszlo Goerke, 2007. "Corporate and personal income tax declarations," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 14(3), pages 281-292, June.
    5. Alessandro Balestrino & Umberto Galmarini, 2005. "On the Redistributive Properties of Presumptive Taxation," CESifo Working Paper Series 1381, CESifo Group Munich.
    6. 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.
    7. repec:spr:epolit:v:34:y:2017:i:2:d:10.1007_s40888-016-0043-1 is not listed on IDEAS
    8. Traxler, Christian, 2012. "Majority voting and the welfare implications of tax avoidance," Journal of Public Economics, Elsevier, vol. 96(1), pages 1-9.
    9. James, Simon & Edwards, Alison, 2010. "An annotated bibliography of tax compliance and tax compliance costs," MPRA Paper 26106, University Library of Munich, Germany.

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