We provide a case for maintaining welfare and income redistribution programs even when their adverse general equilibrium effects reduce total earnings of poor households. Using a Cournot model of intra-household decision-making, we show that even if welfare cutbacks generate large increases in...

Has income tax become voluntary in Australia? It appears that for some, nil or very low tax bills are a very real prospect. Those with flexibility over how they earn income can use a range of legal means of ‘tax arbitrage' to pay a lower marginal tax rate. Those highly motivated to achieve the...