Corruption, tax evasion and the Laffer curve

Sanyal, Amal; Gang, I.; Goswami, O.

Publication

Corruption, tax evasion and the Laffer curve

Authors

Sanyal, Amal, Gang, I., Goswami, O.

Date

1996-04

Type

Journal Article

Collections

Commerce Division Discussion Paper series

Keywords

Laffer curve, auditing, bribe chains, mathematical models, econometric analysis, financial reporting, tax evasion, Economics

Abstract

In a corrupt tax administration a rise in tax rate sets about complicated strategic decision moves by both tax payers as also tax administrators. It is shown that in some circumstances, this may bring about a Laffer like behaviour of overall tax revenue, ie a higher tax rate may result in a smaller net revenue for the government.