IDEAS home Printed from https://ideas.repec.org/p/mcr/wpdief/wpaper00027.html
   My bibliography  Save this paper

Corruption, tax revenue and growth: a non linear relationship?

Author

Listed:
  • Raffaella Coppier

    (University of Macerata)

Abstract

In this paper we explore tax revenue in a regime of widespread corruption in a static and dynamic framework. We prove that the relationship between the tax rate and tax collection is not linear. In a static context, this may bring about a Laffer, like behavior of overall tax revenue; a higher tax rate, via higher corruption, may reduce revenues. In a dynamic context, this rela- tionship is inverted: tax revenues are high for low and high tax rates, while low for intermediate tax rates. Furthermore we prove that the relationship between the tax rate and growth is not linear: at low levels of the tax rate, any increase in it leads to a decreasing growth rate; after a certain threshold, increases in the tax rate lead to an increase in economic growth.

Suggested Citation

  • Raffaella Coppier, 2005. "Corruption, tax revenue and growth: a non linear relationship?," Working Papers 27-2005, Macerata University, Department of Finance and Economic Sciences, revised Oct 2008.
  • Handle: RePEc:mcr:wpdief:wpaper00027
    as

    Download full text from publisher

    File URL: http://www.unimc.it/dief/wpaper/wpaper00027/filePaper
    Download Restriction: no

    References listed on IDEAS

    as
    1. Gary S. Becker, 1974. "Crime and Punishment: An Economic Approach," NBER Chapters,in: Essays in the Economics of Crime and Punishment, pages 1-54 National Bureau of Economic Research, Inc.
    2. Polinsky, A. Mitchell & Shavell, Steven, 2001. "Corruption and optimal law enforcement," Journal of Public Economics, Elsevier, vol. 81(1), pages 1-24, July.
    3. Chander, Parkash & Wilde, Louis, 1992. "Corruption in tax administration," Journal of Public Economics, Elsevier, vol. 49(3), pages 333-349, December.
    4. Antonio Acconcia & Marcello D'Amato & Riccardo Martina, 2003. "Tax Evasion and Corruption in Tax Administration," Public Economics 0310001, EconWPA.
    5. Besley, Timothy & McLaren, John, 1993. "Taxes and Bribery: The Role of Wage Incentives," Economic Journal, Royal Economic Society, vol. 103(416), pages 119-141, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Tsai-Yuan Huang & Po-Chin Wu & Ching-Wen Yan, 2014. "Revisiting the redistribution effects of intergovernmental fiscal transfers: evidence from Taiwan," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 17(4), pages 341-359, December.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mcr:wpdief:wpaper00027. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Silvana Tartufoli). General contact details of provider: http://edirc.repec.org/data/dimacit.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.