
doi: 10.2139/ssrn.648601
handle: 10419/18745
Presumptive taxation, in which an income proxy is used as tax base, has been and is still used today in countries with very diverse situations - developing, transition and developed countries. Usually, this form of taxation is thought of as a revenue-raising device in presence of widespread imperfect tax compliance. We investigate the question of whether presumptive taxation can be used as a redistributive instrument. To this end, we employ an occupational choice model in which an individual can be either an entrepreneur or a worker. We allow for different abilities to dodge taxes across social classes, and consider both the case in which a conventional income tax is in place alongside presumptive taxation and the case in which only presumptive taxation is operating. We argue that a revenue-neutral reform introducing a lump-sum presumptive tax based on occupational choice can improve social welfare, and sometimes even lead to a Pareto-improvement.
ddc:330, tax avoidance, presumptive taxation, redistribution, occupational choice, H26, Steuerwirkung, presumptive taxation, redistribution, tax avoidance, occupational choice, Einkommensteuer, Steuerbemessung, Wohlfahrtseffekt, H21, Kopfsteuer, Arbeitsangebot, Theorie, Steuerinzidenz
ddc:330, tax avoidance, presumptive taxation, redistribution, occupational choice, H26, Steuerwirkung, presumptive taxation, redistribution, tax avoidance, occupational choice, Einkommensteuer, Steuerbemessung, Wohlfahrtseffekt, H21, Kopfsteuer, Arbeitsangebot, Theorie, Steuerinzidenz
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