SSE/EFI Working Paper Series in Economics and Finance,
Stockholm School of Economics

Abstract: The traditional avoidance literature undeservedly neglects tax base distribution as a factor affecting the avoidance price, and generally assumed to be equal to the avoidance cost. In reality, avoidance providers are usually either high-skilled specialists or insiders. The strong collusion thus, naturally seems to be an assumption of the behavior of avoidance providers. Within such a framework, income distribution, which forms an avoidance demand together with tax codes, plays a very essential roll for the outcome of both avoidance price and quantity. My article models an economy with a monopolistic avoidance provider and imperfect information, and illustrates possible consequences of tax base changes. The paper examines the relationship between inequality and a government's ability to collect tax revenue, and also considers the possible outcome of a tax base broadening. Furthermore, it provides an additional explanation for the secession decision.

Keywords: Tax avoidance; optimal taxation; income distribution; endogenous prices; inequality; tax base broadening; secession.

JEL-codes: C72; D31; D42; D43; D69; D82; E61; E65; F15; G28; G29; H21; H24; H25; H31; H32; J61; K34; L12; O17

40 pages, First version: July 5, 2001. Revised: December 3, 2001. Earlier revisions: December 3, 2001.

Full text files

hastef0454.pdf  Full text

Download statistics

• Stockholm School of Economics
• Home page for this series

Questions (including download problems) about the papers in this series should be directed to Helena Lundin ()
Report other problems with accessing this service to Sune Karlsson ().

RePEc:hhs:hastef:0454This page generated on 2024-09-13 22:19:41.