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The Design of Commodity Taxes in the Presence of Tax Evasion with Illustrative Evidence From India
journal contribution
posted on 2023-05-16, 11:19 authored by Ray, RThis article analyzes the impact of tax evasion in the optimal commodity tax model with heterogeneous individuals. A recent model of indirect tax evasion is applied to the many-person case. Indian data show that sales underreporting has a major impact on tax design, and makes the optimal commodity taxes more redistributive. Thus, tax evasion plays a role similar to that of inequality aversion in traditional tax calculations. The tax evasion parameter is endogenized and shown to be nonuniform across items. The article also introduces a framework that allows simultaneous analysis of commodity and income tax evasion. © 1998, Sage Publications. All rights reserved.
History
Publication title
Public Finance ReviewVolume
26Issue
5Pagination
503-518ISSN
0048-5853Department/School
TSBEPublisher
SagePlace of publication
Thousand Oaks, CARepository Status
- Restricted