Tax Avoidance, Endogenous Social Norms, and the Comparison Income Effect

Arbeitspapier

We present a model of income tax avoidance with heterogenous agents, assuming the presence of a comparison income effect and of a psychic cost (disutility) of tax dodging. We analyse the policy preferences of the agents, and identify a median-voter political equilibrium. Paralleling previous results in the optimal taxation literature, we show that the comparison income effect calls for a high degree of progressivity of the income tax; additionally, we find that this tendence is strenghtened by the psychic cost of avoidance. We then investigate the source of the stigma attached to the act of avoidance and find that such stigma is motivated by the desire to make redistribution more effective, and that it is enhanced by the income comparison effect.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: EPRU Working Paper Series ; No. 2005-15

Classification and Topics

• Classification: Wirtschaft
• Subject: Steuervermeidung ; Steuersystem ; Einkommensverteilung ; Wirtschaftsmodell ; Soziale Norm

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Balestrino, Alessandro
• Event: Veröffentlichung
• (who): University of Copenhagen, Economic Policy Research Unit (EPRU)
• (where): Copenhagen
• (when): 2005

Further information

• Handle: http://hdl.handle.net/10419/82036
• Last update: 10.03.2025, 11:43 AM CET