Arbeitspapier

Relative consumption and tax evasion

Relative consumption effects or status concerns that feature jealousy (in the sense of Dupor and Liu, AER 2003) boost consumption expenditure. If consumption is financed by labour income, such status considerations increase labour supply and, hence, the tax base. A higher taxable income, in turn, can make tax evasion more attractive. We show for various specifications of preferences that the tax base effect generally dominates. Consequently, relative consumption effects tend to reduce tax evasion. This is true, irrespective of whether tax parameters are exogenous, guarantee a balanced budget or are set optimally.

Language
Englisch

Bibliographic citation
Series: IAAEU Discussion Paper Series in Economics ; No. 01/2013

Classification
Wirtschaft
Externalities
Taxation and Subsidies: Efficiency; Optimal Taxation
Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies
Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes
Tax Evasion and Avoidance
Subject
Income taxes
Optimal taxation
Relative consumption
Tax evasion
Einkommensteuer
Optimale Besteuerung
Konsuminterdependenz
Steuerflucht
Sozialer Status
Arbeitsangebot
Theorie

Event
Geistige Schöpfung
(who)
Goerke, Laszlo
Event
Veröffentlichung
(who)
University of Trier, Institute for Labour Law and Industrial Relations in the European Union (IAAEU)
(where)
Trier
(when)
2013

Handle
Last update
10.03.2025, 11:44 AM CET

Data provider

This object is provided by:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.

Object type

  • Arbeitspapier

Associated

  • Goerke, Laszlo
  • University of Trier, Institute for Labour Law and Industrial Relations in the European Union (IAAEU)

Time of origin

  • 2013

Other Objects (12)