Taxing boundedly rational entrepreneurs

Michał Ramsza
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Michał Ramsza: Szkoła Główna Handlowa w Warszawie

Collegium of Economic Analysis Annals, 2010, issue 22, 135-147

Abstract: The note presents an evolutionary model of a population of entrepreneurs choosing between two production plans and thus trading opportunities. There is a tax system imposing income tax that is enforced on the population. Also, a level of the legal complexity of a tax system is modeled through boundedly rational choices of entrepreneurs. The model suggests that if the enforcement of a tax system is strong then the increase in the legal complexity leads to increase in the total tax revenue. This may create an incentive for a governing body and politicians to introduce complicated, unclear legal regulations.

Keywords: pairwise comparison; Laffer curve; tax system (search for similar items in EconPapers)
Date: 2010
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Persistent link: https://EconPapers.repec.org/RePEc:sgh:annals:i:22:y:2010:p:135-147

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