Tax compliance and income redistribution: a political competition model
Identificadores
URI: http://hdl.handle.net/10481/31587Metadatos
Mostrar el registro completo del ítemAutor
Solano-García, ÁngelEditorial
Universidad de Granada. Departamento de Teoría e Historia Económica
Materia
Tax evasion Ideological parties Income redistribution Ethical voters
Fecha
2013-07Referencia bibliográfica
Solano-García, A. Tax compliance and income redistribution: a political competition model. Universidad de Granada. Departamento de Teoría e Historia Económica (2013). (The Papers; 13/06). [http://hdl.handle.net/10481/31587]
Resumen
This paper analyzes the political economy of income redistribution when voters are concerned about tax compliance. We consider a two stagemodel where there is a two party competition over the tax rate in the first stage and voters decide about their level of tax compliance in the second stage. We model political competition à la Wittman with the ideology of parties endogenously determined at equilibrium. We calibrate the model for an average of EU-27 countries. Numerical simulations provide the tax rates proposed by the two parties and the level of tax compliance. We find that a decrease in confidence in tax morale, and an increase in parties’ uncertainty about the preferences of the median voter increase the probability that the party offering the lowest income tax will win and decrease tax compliance.