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Social Insurance Under Fraud And Redistributive Taxation

Author

Listed:
  • TSAUR-CHIN MICHAEL WU

    (Department of Public Finance, Feng Chia University, No. 100, Wehhua Rd, Xitun District, Taichung City, 407, ROC)

  • CHIH-TA YEN

    (��Department of Public Finance and Taxation, National Taichung University of Science and Technology, No. 129, Section 3, Sanmin Rd, North District, Taichung City, 404, ROC)

  • CHE-CHIANG HUANG

    (��Department of Public Finance, China University of Technology, No. 56, Section 3, Xinglong Rd, Wonshan District, Taipei City, 116, ROC)

  • JIN-LI HU

    (�Institute of Business and Management, National Chiao Tung University, No. 1001, Daxue Rd, East Dirstrict, Hsinchu City, 30010, ROC)

Abstract

This paper examines the equity and efficiency effects of social insurance in the presence of insurance fraud and linear income taxes and shows the following findings. (i) Under the commonly accepted assumption of decreasing absolute risk aversion (DARA), the social insurance benefit may increase insurance fraud, whereas raising the marginal tax rate (lumpsum transfer) of the linear income tax also causes insurance fraud to increase (decrease). (ii) Equity and efficiency effects of social insurance are conflicting rather than complementary with each other.

Suggested Citation

  • Tsaur-Chin Michael Wu & Chih-Ta Yen & Che-Chiang Huang & Jin-Li Hu, 2023. "Social Insurance Under Fraud And Redistributive Taxation," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 68(02), pages 467-483.
    • Handle: RePEc:wsi:serxxx:v:68:y:2023:i:02:n:s0217590819500115
    DOI: 10.1142/S0217590819500115
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    More about this item

    Keywords

    Social insurance; income taxes; insurance fraud;
    All these keywords.

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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