Research Papers in Economics, Department of Economics, Stockholm University
Tax Avoidance, Redistribution and Voting
Abstract: The main question addressed in this paper is how the
possibility of investing in tax avoidance affects voting and redistributive
outcomes in an economy where the tax rate is determined by a majority vote
and taxes go to lump-sum redistribution. The outcome depends on the timing
and efficiency of tax avoidance. It is shown that in all cases those who
invest in tax avoidance pay proportionally less in taxes than others.
Politically two cases can be distinguished. One where the population is
divided accordingly to income and the median income earner is decisive, and
one where the most affluent form a coalition with those with low income and
the decisive voter has lower than median income.
Keywords: Tax Avoidance; Redistribution; Voting; (follow links to similar papers)
JEL-Codes: D72; H20; H23; H24; (follow links to similar papers)
29 pages, November 27, 1999
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