In a corrupt tax administration a rise in tax rate sets about complicated strategic moves by both taxpayers and administrators. It is shown that in some circumstances, this may bring about a Laffer like behavior of overall tax revenue, i.e. a higher tax rate results in smaller net revenue for...

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...