Taxes and Productivity: A Game of Hide and Seek

Carmen Pagés
Additional contact information
Carmen Pagés: Inter-American Development Bank

Chapter 7 in The Age of Productivity, 2010, pp 153-180 from Palgrave Macmillan

Abstract: Abstract High taxes—and high tax evasion—characterize business taxes in Latin America: a fact that is often considered part of a natural state of affairs. This chapter will argue that the combination of high taxes and widespread evasion has adverse consequences for productivity. High evasion may be a survival strategy for firms that would otherwise fail because of onerous and cumbersome regulations. Yet the combination of high taxes and high evasion distorts the investment decisions of firms, reduces the efficiency of markets, and diverts governments from investing in key public goods—all of which harm the productive possibilities of a society. From this viewpoint, tax evasion is both a consequence and a cause of low productivity and must be addressed directly if productivity is to increase in the region.

Keywords: Small Firm; Total Factor Productivity; Productive Firm; Formal Firm; Informal Firm (search for similar items in EconPapers)
Date: 2010
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

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: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-10761-8_7

Ordering information: This item can be ordered from
http://www.palgrave.com/9780230107618

DOI: 10.1057/9780230107618_7

Access Statistics for this chapter

More chapters in Palgrave Macmillan Books from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().