Optimal Taxes on Wealth and Consumption in the Presence of Tax Evasion
Johann Brunner (),
Susanne Pech () and
Paul Eckerstorfer ()
No 2010-03, NRN working papers from The Austrian Center for Labor Economics and the Analysis of the Welfare State, Johannes Kepler University Linz, Austria
This article incorporates tax evasion into an optimum taxation framework with individuals differing in earning abilities and initial wealth. We find that despite the possibility of its evasion a tax on initial wealth should supplement the optimal nonlinear income tax, given a positive correlation between initial wealth and earning abilities. Further, even if income and initial wealth are taxed optimally, it is still desirable to levy a tax on commodities, though it can be evaded as well. Thus, our result provides a rationale for a comprehensive tax system. Optimal tax rates on commodities differ in general, however for the special case of a uniform evasion technology it turns out that equal rates are optimal if preferences are homothetic and weakly separable.
Keywords: Optimal Taxation; Tax Evasion (search for similar items in EconPapers)
JEL-codes: D82 H21 H24 H26 (search for similar items in EconPapers)
Pages: 22 pages
New Economics Papers: this item is included in nep-acc, nep-pbe and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3) Track citations by RSS feed
Downloads: (external link)
Journal Article: Optimal taxes on wealth and consumption in the presence of tax evasion (2013)
Working Paper: Optimal Taxes on Wealth and Consumption in the Presence of Tax Evasion (2010)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:jku:nrnwps:2010_03
Access Statistics for this paper
More papers in NRN working papers from The Austrian Center for Labor Economics and the Analysis of the Welfare State, Johannes Kepler University Linz, Austria Contact information at EDIRC.
Bibliographic data for series maintained by René Böheim ().