burden stemming from the tax-induced distortion in the allocation of capital across the corporate and the non … would change compared with a sector-neutral tax system which assures an identical effective tax burden on both sectors. Our …

study this question by examining the value-added tax (VAT) threshold in Finland. We find sizable bunching of firms in the … compliance costs of VAT reporting rather than the level of the tax rate. In addition, we find that compliance costs hinder the …

compliance costs, agents are indifferent to the tax rate level as in response, they can perfectly adapt their level of compliance … increase the tax base. When compliance costs are introduced, perfect substitutability between compliance and taxation breaks … to income, we obtain that the preferred tax rate should be increasing or decreasing in income. The majority voting tax …