The distributional component of the price of the tax avoidance service

Arbeitspapier

The traditional avoidance literature undeservedly neglects tax base distribution as a factor affecting the avoidance price, and generally assumed to be equal to the avoidance cost. In reality, avoidance providers are usually either high-skilled specialists or insiders. The strong collusion thus, naturally seems to be an assumption of the behavior of avoidance providers. Within such a framework, income distribution, which forms an avoidance demand together with tax codes, plays a very essential roll for the outcome of both avoidance price and quantity. My article models an economy with a monopolistic avoidance provider and imperfect information, and illustrates possible consequences of tax base changes. The paper examines the relationship between inequality and a government's ability to collect tax revenue, and also considers the possible outcome of a tax base broadening. Furthermore, it provides an additional explanation for the secession decision.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: SSE/EFI Working Paper Series in Economics and Finance ; No. 454

Classification and Topics

• Classification: Wirtschaft ; Noncooperative Games ; Personal Income, Wealth, and Their Distributions ; Market Structure, Pricing, and Design: Monopoly ; Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection ; Welfare Economics: Other ; Asymmetric and Private Information; Mechanism Design ; Policy Objectives; Policy Designs and Consistency; Policy Coordination ; Studies of Particular Policy Episodes ; Economic Integration ; Financial Institutions and Services: Government Policy and Regulation ; Financial Institutions and Services: Other ; Taxation and Subsidies: Efficiency; Optimal Taxation ; Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes ; Business Taxes and Subsidies including sales and value-added (VAT) ; Fiscal Policies and Behavior of Economic Agents: Household ; Fiscal Policies and Behavior of Economic Agents: Firm ; Geographic Labor Mobility; Immigrant Workers ; Tax Law ; Monopoly; Monopolization Strategies ; Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
• Subject: Tax avoidance ; optimal taxation ; income distribution ; endogenous prices ; inequality ; tax base broadening ; secession

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Damjanovic, Tatiana
• Event: Veröffentlichung
• (who): Stockholm School of Economics, The Economic Research Institute (EFI)
• (where): Stockholm
• (when): 2002

Further information

• Handle: http://hdl.handle.net/10419/56192
• Last update: 10.03.2025, 11:42 AM CET