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Herding, rent-seeking taxpayers, and endemic corruption

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  • Gil S. Epstein
  • Ira N. Gang

Abstract

In an environment with extensive corruption where much of the population evades paying their full taxes due, we tackle the question of optimal taxation when constituencies with opposing objectives (the poor and the rich) push tax policy in different directions. We think in terms of a government policy-maker, here called the tax administrator (TA), and rent-seeking lobbying efforts by poor and rich constituencies. We recognize taxpayers' inter-dependency as reflected in increased evasion likelihood when others are thought to be evading.

Suggested Citation

  • Gil S. Epstein & Ira N. Gang, 2022. "Herding, rent-seeking taxpayers, and endemic corruption," WIDER Working Paper Series wp-2022-162, World Institute for Development Economic Research (UNU-WIDER).
    • Handle: RePEc:unu:wpaper:wp-2022-162
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    References listed on IDEAS

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