Poverty and the Optimal General Income Tax-cum-Audit Policy

Marcelo Aarestrup Arbex () and Enlinson Mattos ()

No 02-2010, Working Papers from Universidade de São Paulo, Faculdade de Economia, Administração e Contabilidade de Ribeirão Preto

Abstract: This paper investigates the optimal general income tax and audit policies when poverty is a public bad and income is not observed in an economy with two types of individuals. Dierently from the traditional "non-distortion at the top" result of the optimal taxation literature, we nd that the optimal marginal income tax rate on skilled individuals is positive when reducing poverty is one of the goals of the social planner and their consumption can affect negatively the poverty measure. Consequently, skilled individuals might be audited stochastically. We characterize a tax regime in which unskilled workers face a negative marginal tax.

Keywords: Poverty; Tax evasion; Optimum Taxation (search for similar items in EconPapers)
JEL-codes: D82 H21 H26 I32 (search for similar items in EconPapers)
Date: 2010-03-03
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed

Downloads: (external link)
ftp://cpq.fearp.usp.br:2300/textos_discussao/eco/TD-E02-2010.pdf First version, 2010 (application/pdf)
Our link check indicates that this URL is bad, the error code is: 500 Failed to connect to FTP server cpq.fearp.usp.br: Net::FTP: connect: 10060

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:fea:wpaper:02-2010

Access Statistics for this paper

More papers in Working Papers from Universidade de São Paulo, Faculdade de Economia, Administração e Contabilidade de Ribeirão Preto
Contact information at EDIRC.
Series data maintained by Bruno Vizona Liberato ().