In:
The Scandinavian Journal of Economics, Wiley
Kurzfassung:
We study optimal income taxation in a two‐group framework where the private cost of misreporting income is positively correlated with productivity. If high‐wage types always reveal their income truthfully, then letting low‐wage types cheat leads to Pareto‐superior outcomes regardless of the audit costs (as compared to deterrence). With no cheating, redistribution takes place on first‐ or second‐best frontiers and low‐wage types always end up worse off than high‐wage types. Letting low‐wage types misreport reduces the need to recourse to second‐best mechanisms. Additionally, it increases the reach of first‐best redistribution to outcomes at which low‐wage types are better off than high‐wage types.
Materialart:
Online-Ressource
ISSN:
0347-0520
,
1467-9442
Sprache:
Englisch
Verlag:
Wiley
Publikationsdatum:
2023
ZDB Id:
8170-X
ZDB Id:
1473804-1
