We introduce bureaucratic corruption in a simple way and examine its effect on government revenue when policies change. We show that a rise in the tax rate can lead to a fall in net revenue--a Laffer curve result due to the proportion of auditors that are corrupt and enforcement costs. It may...

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...