Arbeitspapier
Welfare Improving Tax Evasion
We study optimal income taxation in a framework where one's willingness to report his income truthfully is positively correlated with his type. We show that allowing low-productivity types to cheat leads to Pareto-superior outcomes as compared to deterring them, even if audits can be performed costlessly. When there is no cheating, redistribution takes place on first- and second-best frontiers and can never make low-ability types more well-off than high-ability types. Letting low-ability types cheat allows first-best redistribution up to a limit at which low-ability types are better off than high-ability types.
- Language
-
Englisch
- Bibliographic citation
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Series: IZA Discussion Papers ; No. 13483
- Classification
-
Wirtschaft
Taxation, Subsidies, and Revenue: General
Taxation and Subsidies: Efficiency; Optimal Taxation
Tax Evasion and Avoidance
- Subject
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optimal taxation
tax evasion
audits
welfare-improving
- Event
-
Geistige Schöpfung
- (who)
-
Canta, Chiara
Cremer, Helmuth
Gahvari, Firouz
- Event
-
Veröffentlichung
- (who)
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Institute of Labor Economics (IZA)
- (where)
-
Bonn
- (when)
-
2020
- Handle
- Last update
-
10.03.2025, 11:44 AM CET
Data provider
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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
- Canta, Chiara
- Cremer, Helmuth
- Gahvari, Firouz
- Institute of Labor Economics (IZA)
Time of origin
- 2020
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