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Canta, Chiara
, Cremer, Helmuth and Gahvari, Firouz
(2020)
Welfare improving tax evasion.
TSE Working Paper, n. 20-1121, Toulouse
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Abstract
We study optimal income taxation in a framework where one's willingness to report his income truthfully is positively correlated with his type. We show that allowing low-productivity types to cheat leads to Pareto-superior outcomes as compared to deterring
them, even if audits can be performed costlessly. When there is no cheating, redistribution
takes place on first- and second-best frontiers and can never make low-ability types more well-off than high-ability types. Letting low-ability types cheat allows first-best redistribution up to a limit at which low-ability types are better off than high-ability types.
| Item Type: | Monograph (Working Paper) |
|---|---|
| Language: | English |
| Date: | July 2020 |
| Place of Publication: | Toulouse |
| Uncontrolled Keywords: | Optimal taxation, tax evasion, audits, welfare-improving. |
| JEL Classification: | H20 - General H21 - Efficiency; Optimal Taxation H26 - Tax Evasion |
| Subjects: | B- ECONOMIE ET FINANCE |
| Divisions: | TSE-R (Toulouse) |
| Institution: | Université Toulouse 1 Capitole |
| Site: | UT1 |
| Date Deposited: | 08 Jul 2020 15:26 |
| Last Modified: | 27 Oct 2021 13:38 |
| OAI Identifier: | oai:tse-fr.eu:124417 |
| URI: | https://publications.ut-capitole.fr/id/eprint/35094 |
