Ira Gang
Rutgers University
Department of Economics
E-mail: gang@economics.rutgers.edu
Item Number: [J45]
Title: Corruption, Tax Evasion and the Laffer Curve
Abstract: In a corrupt tax administration a rise in tax rate sets off
complicated strategic moves by both taxpayers and administrators. It is shown
that in some circumstances, this may bring about Laffer like behavior of
overall tax revenue, i.e. a higher tax rate results in smaller net revenue
for the government. Further, a more intense tax effort by increasing the number
of returns audited may also reduce net revenues. Finally if tax and fine
rates positively influence the level of corruption in the administration,
these outcomes become more likely.
Reference: Ira N. Gang, Omkar Goswami, and Amal Sanyal, Corruption,
Tax Evasion and the Laffer Curve, Public Choice 105 (2000) 61-78.
Co-Author Information:
Amal Sanyal
Lincoln University, New Zealand
E-Mail: sanyala@lincoln.ac.nz
Omkar Goswami
Confederation of Indian Industry, New Delhi, India
E-Mail: omkar_goswami@hotmail.com
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