publication . Preprint . 2005

Does More Progressive Tax Make Tax Discipline Weaker?

Tatiana Damjanovic;
Open Access
  • Published: 01 Feb 2005
Abstract
This paper investigates the relationship between the disparity in tax base and tax collection. I address the tax collection problem with traditional industrial organization approach. Thus, I model the "tax minimization" industry where the supplier helps taxpayers to avoid their tax liability. I find that lower income inequality as well as a less progressive tax code may result in a smaller number of tax payers committing to their tax duties. Finally, I question the reduction in the highest tax rate as a policy directed at the improvement of tax discipline.
Subjects
ACM Computing Classification System: ComputingMilieux_LEGALASPECTSOFCOMPUTINGComputingMilieux_GENERAL
free text keywords: Endogenous prices, tax collection, inequality, tax progressivity., jel:H21, jel:H23, jel:H26
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