Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/73477
Authors: 
Balafoutas, Loukas
Year of Publication: 
2009
Series/Report no.: 
Working Papers in Economics and Statistics 2009-29
Abstract: 
This paper studies how income tax rates are determined and how they are related to government corruption in the form of fund capture. A model is presented where rich voters can block redistribution by buying the votes of some poor voters. In equilibrium there is only limited redistribution and income tax rates are a negative function of government corruption. When rich voters can bribe the government, an additional equilibrium with zero taxation is possible. The link between corruption and tax rates is tested using cross country data; the empirical evidence is fully consistent with the predictions of the model.
Subjects: 
tax rates
vote-buying
lobbying
government corruption
JEL: 
D72
D73
H2
H3
Document Type: 
Working Paper

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