Why can modern governments tax so much? An agency model of firms as fiscal intermediaries

Henrik Jacobsen Kleven, Claus Kreiner and Emmanuel Saez

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: We develop an agency model explaining why third-party information reporting by firms makes tax enforcement successful. While third-party reporting would be ineffective with frictionless collusion between firms and employees, collusive evasion is impossible to sustain in firms with many employees and accurate business records as any single employee may reveal evasion. We embed our agency model into a macro model where the number of employees grows with development, showing that the tax take evolves as an S-shape driven by changes in third-party information. We show that our model is consistent with a set of stylized facts on taxation and development.

JEL-codes: E6 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2016-04-01
References: View complete reference list from CitEc
Citations: View citations in EconPapers (159)

Published in Economica, 1, April, 2016, 83(330), pp. 219 - 246. ISSN: 0013-0427

Downloads: (external link)
http://eprints.lse.ac.uk/66114/ Open access version. (application/pdf)

Related works:
Journal Article: Why Can Modern Governments Tax So Much? An Agency Model of Firms as Fiscal Intermediaries (2016)
Working Paper: Why Can Modern Governments Tax So Much? An Agency Model of Firms as Fiscal Intermediaries (2009)
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:ehl:lserod:66114

Access Statistics for this paper

More papers in LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library LSE Library Portugal Street London, WC2A 2HD, U.K.. Contact information at EDIRC.
Bibliographic data for series maintained by LSERO Manager ().