Fairness in Tax compliance: A Political Competition Model

Angel Solano Garcia ()

No 14/02, ThE Papers from Department of Economic Theory and Economic History of the University of Granada.

Abstract: This paper analyzes the political economy of income redistribution when voters are concerned about fairness in tax compliance. We consider a two stage-model where there is a two-party competition over the tax rate and over the intensity of the tax enforcement policy in the first stage, and voters decide about their level of tax compliance in the second stage. We find that if the concern about fairness in tax compliance is high enough, a liberal middle-income majority of voters may block any income redistribution policy. Alternatively, we find an equilibrium in which the preferences of the median voter are ignored in favor of a coalition formed by a group of relatively poor voters and the richest voters. In this equilibrium income redistribution prevails with no tax enforcement.

Keywords: tax evasion; political parties; income redistribution; fairness. (search for similar items in EconPapers)
JEL-codes: D72 H26 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2014-04-15
New Economics Papers: this item is included in nep-cdm, nep-iue, nep-pbe, nep-pol and nep-pub
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http://www.ugr.es/~teoriahe/RePEc/gra/wpaper/thepapers14_02.pdf (application/pdf)

Related works:
Journal Article: Fairness in tax compliance: A political competition model (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:gra:wpaper:14/02

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