Tax Morale with Partisan Parties

Angel Solano Garcia ()

Hacienda Pública Española / Review of Public Economics, 2015, vol. 213, issue 2, 83-108

Abstract: This paper analyzes the political economy of income redistribution when voters are concerned about tax compliance. We consider a two stage-model where there is a two party competition over the tax rate in the first stage and voters decide about their level of tax compliance in the second stage. We model political competition a la Wittman with the ideology of parties endogenously determined at equilibri¬um. We calibrate the model for an average of EU-27 countries. Numerical simulations provide the tax rates proposed by the two parties and the level of tax compliance. We find that a decrease in the per¬ceived average level of tax compliance, increase the probability that the party offering the lowest in¬come tax will win. Moreover, the same result is obtained when parties’ uncertainty about the prefer¬ences of the median voter increases

Keywords: tax evasion; ideological parties; income redistribution; ethical voters. (search for similar items in EconPapers)
JEL-codes: D72 H26 (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:hpe:journl:y:2015:v:213:i:2:p:83-108

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