On the redistributive properties of presumptive taxation

Arbeitspapier

Presumptive taxation, in which an income proxy is used as tax base, has been and is still used today in countries with very diverse situations - developing, transition and developed countries. Usually, this form of taxation is thought of as a revenue-raising device in presence of widespread imperfect tax compliance. We investigate the question of whether presumptive taxation can be used as a redistributive instrument. To this end, we employ an occupational choice model in which an individual can be either an entrepreneur or a worker. We allow for different abilities to dodge taxes across social classes, and consider both the case in which a conventional income tax is in place alongside presumptive taxation and the case in which only presumptive taxation is operating. We argue that a revenue-neutral reform introducing a lump-sum presumptive tax based on occupational choice can improve social welfare, and sometimes even lead to a Pareto-improvement.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 1381

Classification and Topics

• Classification: Wirtschaft ; Tax Evasion and Avoidance ; Taxation and Subsidies: Efficiency; Optimal Taxation
• Subject: tax avoidance ; presumptive taxation ; redistribution ; occupational choice ; Einkommensteuer ; Steuerbemessung ; Kopfsteuer ; Steuerinzidenz ; Arbeitsangebot ; Steuerwirkung ; Wohlfahrtseffekt ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Balestrino, Alessandro ; Galmarini, Umberto
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2005

Further information

• Handle: http://hdl.handle.net/10419/18745
• Last update: 10.03.2025, 11:42 AM CET