Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/108180
Authors: 
Simonovits, András
Year of Publication: 
2010
Series/Report no.: 
IEHAS Discussion Papers MT-DP - 2010/5
Abstract: 
We analyze the impact of tax morality on progressive income (wage) taxation. We assume that transfers (cash-back) and public expenditures are financed from linear wage taxes. We derive the reported wages from individual utility maximization, when individuals obtain partial satisfaction from reporting wages (depending on their tax morality), and cannot be excluded from the use of public services. The government maximizes a utilitarian social welfare function, also taking into account the utility of public services. The major conjecture is illustrated by numerical examples: the optimal degree of redistribution and the size of the public services are increasing functions of the individuals' tax morality.
Subjects: 
tax moral
reporting earnings
progressive income tax
welfare economics
JEL: 
H55
D91
ISBN: 
978-963-9796-92-8
Document Type: 
Working Paper

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