Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/56192
Authors: 
Damjanovic, Tatiana
Year of Publication: 
2002
Series/Report no.: 
SSE/EFI Working Paper Series in Economics and Finance 454
Abstract: 
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.
Subjects: 
Tax avoidance
optimal taxation
income distribution
endogenous prices
inequality
tax base broadening
secession
JEL: 
C72
D31
D42
D43
D69
D82
E61
E65
F15
G28
G29
H21
H24
H25
H31
H32
J61
K34
L12
O17
Document Type: 
Working Paper

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