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Title:The distributional component of the price of the tax avoidance service PDF Logo
Authors:Damjanovic, Tatiana
Issue Date: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
Appears in Collections:SSE/EFI Working Paper Series in Economics and Finance, EFI - The Economic Research Institute, Stockholm School of Economics

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