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Reducing Current Taxes to Raise Future Revenue

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  • Amihai Glazer

    () (Department of Economics, University of California-Irvine)

Abstract

A government which raises taxes in the current period may induce workers to invest in finding ways to reduce their tax payments, and so may reduce the government's ability to raise revenue in the future. Therefore, a government that fears it may have to raise much revenue in the future may set taxes in the current period at a lower level than that which would maximize revenue, or that would maximize social welfare in that period.

Suggested Citation

  • Amihai Glazer, 2008. "Reducing Current Taxes to Raise Future Revenue," Working Papers 080914, University of California-Irvine, Department of Economics.
  • Handle: RePEc:irv:wpaper:080914
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    File URL: https://www.economics.uci.edu/files/docs/workingpapers/2008-09/glazer-14.pdf
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    References listed on IDEAS

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    1. Christina D. Romer & David H. Romer, 2009. "Do Tax Cuts Starve the Beast? The Effect of Tax Changes on Government Spending," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 40(1 (Spring), pages 139-214.
    2. Svensson, Jakob, 1998. "Investment, property rights and political instability: Theory and evidence," European Economic Review, Elsevier, vol. 42(7), pages 1317-1341, July.
    3. Barro, Robert J, 1979. "On the Determination of the Public Debt," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 940-971, October.
    4. Bruno Frey & Friedrich Schneider, 2000. "Informal and underground economy," Economics working papers 2000-04, Department of Economics, Johannes Kepler University Linz, Austria.
    5. Joel Slemrod, 2007. "Cheating Ourselves: The Economics of Tax Evasion," Journal of Economic Perspectives, American Economic Association, vol. 21(1), pages 25-48, Winter.
    6. David Giles & Patrick Caragata, 2001. "The learning path of the hidden economy: the tax burden and tax evasion in New Zealand," Applied Economics, Taylor & Francis Journals, vol. 33(14), pages 1857-1867.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Tax evasion; Intertemporal taxation;

    JEL classification:

    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • H60 - Public Economics - - National Budget, Deficit, and Debt - - - General

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