Does Higher Tax Morale Imply Higher Optimal Labor Income Tax Rate?

Andras Simonovits ()

DANUBE: Law and Economics Review, 2013, issue 2, 97-114

Abstract: We analyze the impact of tax morale on optimal progressive labor income taxation. Only universal basic income is financed from a linear tax and the financing of public goods is neglected. Each individual supplies labor and (un)declares earning, depending on his labor disutility and tax morale. Limiting the utilitarianism to the poorer parts of the population (defined by the inclusion share), the optimal tax rate is an increasing function of the tax morale and a decreasing function of the inclusion share, provided that the average wage of those included is higher than 0.54 times the average wage.

Keywords: Tax Morale; Progressive Income Tax; Undeclared Earning; Income Redistribution; Labor Supply (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:cmn:journl:y:2013:i:2:p:97-114

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