Tax revenues, fiscal corruption and “shame” costs |
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Authors: | Roy Cerqueti Raffaella Coppier |
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Affiliation: | aUniversity of Macerata, Department of Economic and Financial Institutions, Via Crescimbeni, 20-62100, Macerata, Italy |
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Abstract: | In this paper we explore tax revenues in a regime of widespread fiscal corruption in a static framework. We prove that the relationship between the tax rate and tax revenues depends on the relevance of the “shame effect” of being detected in a corrupt transaction. In countries with a “low shame” effect, tax revenues grow as the tax rate increases. Moreover, there is a critical tax rate where the growth rate of tax revenues begins to reduce. In countries with a high “shame effect” tax revenues increase up to a threshold value and then decrease. |
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Keywords: | D73 H21 H26 |
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