Tax enforcement may decrease government revenue
We analyze the relation between tax enforcement, aggregate output and government revenue when imperfectly competitive firms evade a specific output tax. We show that aggregate output decreases with tax enforcement. Government revenue increases with enforcement when the tax is low. When the tax is high, government revenue is either inversely U-shaped or decreasing with enforcement.
Volume (Year): 29 (2009)
Issue (Month): 4 ()
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References listed on IDEAS
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