Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/104188
Authors: 
Traxler, Christian
Year of Publication: 
2006
Series/Report no.: 
Munich Discussion Paper 2006-27
Abstract: 
This paper studies majority voting on taxes when tax evasion is possible. We characterize the voting equilibrium where the agent with median taxed income is pivotal. Since the ranking of true incomes does not necessarily correspond to the ranking of taxed incomes, the decisive voter can differ from the median income receiver. In this case, we find unconventional patterns of redistribution, e.g. from the middle class to the poor and the rich. Furthermore, we show that majority voting can lead to an inefficiently low level of taxation – despite a right-skewed income distribution. Hence, the classical over-provision result might turn around, once tax evasion is taken into account.
Subjects: 
Majority Voting
Tax Evasion
Welfare Analysis
Redistribution
JEL: 
H26
H72
D6
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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