Stricter Enforcement May Increase Tax Evasion
Rainald Borck
No 297, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research
Abstract:
This paper shows that stricter enforcement may increase tax evasion. Individuals vote on a linear income tax which is used to finance lump sum transfers. Stricter enforcement may make redistributive taxation more attractive to the decisive voter. The tax rate and transfer may rise which in turn may increase tax evasion. An example shows that this result can actually occur. The paper also discusses the interaction between voting on taxes and the choice of audit rate by a budget maximizing bureaucrat.
Keywords: Tax evasion; enforcement; voting (search for similar items in EconPapers)
JEL-codes: D72 H26 (search for similar items in EconPapers)
Pages: 16 p.
Date: 2002
New Economics Papers: this item is included in nep-pub and nep-reg
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Citations: View citations in EconPapers (4)
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https://www.diw.de/documents/publikationen/73/diw_01.c.38639.de/dp297.pdf (application/pdf)
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Persistent link: https://EconPapers.repec.org/RePEc:diw:diwwpp:dp297
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