Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/32229
Authors: 
Traxler, Christian
Year of Publication: 
2009
Series/Report no.: 
Preprints of the Max Planck Institute for Research on Collective Goods 2009,22
Abstract: 
A benchmark result in the political economy of taxation is that majority voting over a linear income tax schedule will result in an inefficiently high tax rate whenever the median voter has a below average income. The present paper examines the role of tax avoidance for this welfare assessment. We find that the inefficiency in the voting equilibrium is the lower, the higher the average level of tax avoidance in the economy, or equivalently, the lower the median voter's amount of avoidance. The result holds for endogenous avoidance and labor choice and, under certain conditions, for an endogenous enforcement policy.
Subjects: 
Tax avoidance
welfare analysis
majority voting
median voter equilibrium
JEL: 
H26
D72
D6
Document Type: 
Working Paper

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