Towards a theory of the direct-indirect tax mix

Boadway, Robin; Marchand, Maurice; Pestieau, Pierre

doi:10.1016/0047-2727(94)90081-7

Cited by 120 publications

(106 citation statements)

References 13 publications

Supporting

Mentioning

104

Contrasting

Unclassified

Order By: Relevance

“…With the true income being equal to w t L t ; the amount of income concealed is equal 1 4 See, e.g., Mayshar (1991), Boadway et al (1994), Kopczuk (2001), Slemrod (2001), andChetty (2009). 7 to a t = w t L t I t . The cost of misreporting is expressed by means of the function f (a t ) : Assume that f ( ) is non-negative, increasing in the absolute value of a t and strictly convex with f (0) = f 0 (0) = 0.…”

Section: Fiscal Policymentioning

confidence: 99%

“…In the context of the uniform taxation results, for example, Cremer and Gahvari (1993) prove that the Ramsey results are no longer valid. Similarly, Boadway et al (1994) show how the presence of tax evasion destroys the celebrated Atkinson and Stiglitz (1976) theorem on the redundancy of commodity taxes in the presence of Mirrleesian optimal income tax if preferences are weakly separable in labor supply and goods. One would then expect the same fate for the Friedman rule.…”

Section: Introductionmentioning

confidence: 99%

“…5 With the exception of intergenerational redistributive issues that arise in overlapping generations models; see, e.g., Weiss (1980), Abel (1987), and Gahvari (1988). 6 See, e.g., Chari et al (1991Chari et al ( , 1996, Teles (1996, 1999), Guidotti and Vegh (1993), and Mulligan and Sala-i-Martin (1997). 7 The ine¤ectiveness of commodity taxes and their proportionately uniform structure boil down to the same thing.…”

Section: Introductionmentioning

confidence: 99%

“…5 A second related drawback of these studies is their reliance on the Ramsey tax framework, which assumes that all tax instruments, including the income tax, are set linearly. 6 In a recent contribution, da Costa and Werning (2008) break with this tradition and consider the optimality of the Friedman rule in a model with heterogeneous agents and allow the government to levy nonlinear income taxes. Interestingly, they show that the Friedman rule is optimal in their setting (for any social welfare function that redistributes from the rich to the poor).…”

Section: Introductionmentioning

confidence: 99%

See 3 more Smart Citations

The Friedman rule in an overlapping-generations model with nonlinear taxation and income misreporting

Gahvari

Micheletto

2014

Journal of Public Economics

View full text Add to dashboard Cite

This paper models an overlapping-generations economy that includes money and is populated with individuals of di¤erent skills. They face a nonlinear income tax schedule and can engage in tax evasion. Money serves two purposes: the traditional one, modeled through a money-in-the-utility-function, and to facilitate tax evasion. It shows that income tax evasion leads to the violation of the Friedman rule that will otherwise hold.JEL classi…cation: H21; E52.

show abstract

Section: Fiscal Policymentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

The Friedman rule in an overlapping-generations model with nonlinear taxation and income misreporting

Gahvari

Micheletto

2014

Journal of Public Economics

View full text Add to dashboard Cite

show abstract

“…Instead, differences in commodity tax levels are often attributed to different preferences for public goods and redistribution. In addition, an important determinant of the direct-indirect tax mix in each country is the ability of national tax administrations to control income tax evasion (see Boadway, Marchand and Pestieau, 1994).…”

Section: Isolated Differences In Tax Ratesmentioning

confidence: 99%

Tacit collusion and international commodity taxation

Haufler¹,

Schjelderup

2004

Journal of Public Economics

View full text Add to dashboard Cite

The paper employs a model of dynamic price competition to study how international commodity taxation affects the stability of collusive agreements when producers in an international duopoly agree not to export into each other's home market. We consider both the choice of international tax principle and the harmonization of tax rates and differentiate between a setting where production costs differ between countries, and a setting where exogenous tax rate differentials are the only asymmetry. The conclusions derived from this model differ strongly from those obtained under the assumption of competitive product markets.

show abstract

How regressive are indirect taxes? A microsimulation analysis for five European countries

Decoster

Loughrey

O’Donoghue

et al. 2010

J Policy Anal Manage

View full text Add to dashboard Cite

Shifting the tax burden from labor to consumption is proposed in many developed INTRODUCTIONIndirect taxation forms part of a mix of different tax and revenue-raising instruments including taxes on income, property, and social security levies on employment income that households and other economic agents face. As Table 1 illustrates for the OECD, indirect or consumption taxation is a substantial component in the tax system of most industrialized countries. Despite a decline in relative importance mainly taking place during the '70s, the total share of government revenue raised via consumption seems to have stabilized at around 30 percent, 1 which still is substantially more than, for instance, the income tax. Note that this stabilization since 1980 hides two distinct evolutions partly offsetting one another: the implosion of taxes on special goods and services (excise taxes 2 ) from 1960 onward and the rise of taxes on general consumption (mainly VAT and sales taxes) in the same period. Lacking an adequate political economy model of tax system formation, it is difficult to give a conclusive interpretation of these opposite evolutions. Theoretically there are (productive efficiency) arguments contra and (externality) We only consider relative trends in this paper. In absolute terms there is evidence of a correlation between the share of tax raised by VAT and the overall tax burden in a country (Keen & Lockwood, 2006). 2 It should be noted that import duties also belong to this category, suggesting that the promotion of free trade might be responsible for the decreasing influence of this revenue type. Detailed figures, such as in OECD (2008a), show nevertheless that (1) the share of import duties is too small to provoke an effect of this magnitude and that (2) for the more restricted category of excise duties without import duties the evolution is analogous.

show abstract

Towards a theory of the direct-indirect tax mix

Cited by 120 publications

References 13 publications

The Friedman rule in an overlapping-generations model with nonlinear taxation and income misreporting

The Friedman rule in an overlapping-generations model with nonlinear taxation and income misreporting

Tacit collusion and international commodity taxation

How regressive are indirect taxes? A microsimulation analysis for five European countries

Contact Info

Product

Resources

About