Merit goods provision and optimal tax evasion
In a recent article Davidson, Lawrence and Wilson propose a model showing that, in the presence of distortionary taxation and goods of different quality, tax evasion can be an optimal device. Here, we show that this result, although quite interesting, cannot be generalised to a framework where Government activity consists of supplying merit goods and levying taxes to finance their provision.
Volume (Year): 8 (2008)
Issue (Month): 7 ()
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- Rosella Levaggi, 2006.
"Tax evasion and the cost of public sector activities,"
ubs0616, University of Brescia, Department of Economics.
- Rosella Levaggi, 2007. "Tax Evasion and the Cost of Public Sector Activities," Public Finance Review, , vol. 35(5), pages 572-585, September.
- Davidson, Carl & Martin, Lawrence & Wilson, John Douglas, 2007. "Efficient black markets?," Journal of Public Economics, Elsevier, vol. 91(7-8), pages 1575-1590, August.
- Davidson, Carl & Martin, Lawrence W. & Wilson, John D., 2005. "Tax evasion as an optimal tax device," Economics Letters, Elsevier, vol. 86(2), pages 285-289, February.
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