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Voting over tax schedules in the presence of tax avoidance

Author

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  • Roine, Jesper

    (Dept. of Economic Statistics, Stockholm School of Economics)

Abstract

This paper reconsiders the classical problem of majority voting over tax schedules, adding the possibility to avoid taxes. In this setting preferences over tax schedules are not determined by earned income, but rather by taxable income, which depends on the joint decisions of labor supply and tax avoidance investments. The ordering of earned- and taxable income are shown to be the same if the tax avoidance function is log concave.

Suggested Citation

  • Roine, Jesper, 2003. "Voting over tax schedules in the presence of tax avoidance," SSE/EFI Working Paper Series in Economics and Finance 529, Stockholm School of Economics.
    • Handle: RePEc:hhs:hastef:0529
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    References listed on IDEAS

    as
    1. Gans, Joshua S. & Smart, Michael, 1996. "Majority voting with single-crossing preferences," Journal of Public Economics, Elsevier, vol. 59(2), pages 219-237, February.
    2. Agell, Jonas & Persson, Mats, 2000. "Tax arbitrage and labor supply," Journal of Public Economics, Elsevier, vol. 78(1-2), pages 3-24, October.
    3. Romer, Thomas, 1975. "Individual welfare, majority voting, and the properties of a linear income tax," Journal of Public Economics, Elsevier, vol. 4(2), pages 163-185, February.
    4. Paul Milgrom & Ilya Segal, 2002. "Envelope Theorems for Arbitrary Choice Sets," Econometrica, Econometric Society, vol. 70(2), pages 583-601, March.
    5. repec:bla:scandj:v:93:y:1991:i:1:p:75-88 is not listed on IDEAS
    6. Roberts, Kevin W. S., 1977. "Voting over income tax schedules," Journal of Public Economics, Elsevier, vol. 8(3), pages 329-340, December.
    7. Meltzer, Allan H & Richard, Scott F, 1981. "A Rational Theory of the Size of Government," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 914-927, October.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Borck, Rainald, 2004. "Stricter enforcement may increase tax evasion," European Journal of Political Economy, Elsevier, vol. 20(3), pages 725-737, September.
    2. Besfamille, Martin & De Donder, Philippe & Lozachmeur, Jean-Marie, 2009. "The Political Economy of the (Weak) Enforcement of Sales Tax," CEPR Discussion Papers 7108, C.E.P.R. Discussion Papers.
    3. Christian Traxler, 2009. "Voting over taxes: the case of tax evasion," Public Choice, Springer, vol. 140(1), pages 43-58, July.

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    More about this item

    Keywords

    Tax avoidance; Majority voting; Order-restricted preferences; Single-crossing condition;
    All these keywords.

    JEL classification:

    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General

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