Tax enforcement may decrease government revenue

We analyze the relation between tax enforcement, aggregate output and government revenue when imperfectly competitive firms evade a specific output tax. We show that aggregate output decreases with tax enforcement. Government revenue increases with enforcement when the tax is low. When the tax is high, government revenue is either inversely U-shaped or decreasing with enforcement.

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Year of publication:	2009
Authors:	Besfamille, Martin ; Donder, Philippe De ; Lozachmeur, Jean Marie
Published in:	Economics Bulletin. - AccessEcon, ISSN 1545-2921. - Vol. 29.2009, 4, p. 2665-2672
Publisher:	AccessEcon
Subject:	Tax enforcement \| tax evasion \| imperfect competition \| government revenue

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Extent:	application/pdf
Type of publication:	Article
Language:	English
Classification:	H3 - Fiscal Policies and Behavior of Economic Agents ; D4 - Market Structure and Pricing
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10008562999