Stricter enforcement may increase tax evasion

This paper shows that stricter enforcement may increase tax evasion. Individuals vote on a linear income tax which is used to finance lump sum transfers. Stricter enforcement may make redistributive taxation more attractive to the decisive voter. The tax rate and transfer may rise which in turn may increase tax evasion. An example shows that this result can actually occur. The paper also discusses the interaction between voting on taxes and the choice of audit rate by a budget maximizing bureaucrat.

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Year of publication:	2002
Authors:	Borck, Rainald
Publisher:	Berlin : Deutsches Institut für Wirtschaftsforschung (DIW)
Subject:	Einkommensteuer \| Finanzverwaltung \| Steuerliche Betriebsprüfung \| Steuerstraftat \| Sozialtransfer \| Public Choice \| Theorie \| Tax evasion \| enforcement \| voting

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Series:	DIW Discussion Papers ; 297
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Working Paper
Language:	English
Other identifiers:	848984102 [GVK] hdl:10419/18281 [Handle] RePEc:diw:diwwpp:dp297 [RePEc]
Classification:	H26 - Tax Evasion ; D72 - Economic Models of Political Processes: Rent-Seeking, Elections, Legistures, and Voting Behavior
Source:	EconStor