Income Tax Indexation in an Open Economy

Income tax progressivity, physical capital, aggregate uncertainty and long-run growth in an OLG economy

This paper analyzes the long-run growth-maximizing progressivity of income taxation in a standard two-period, overlapping generations model economy in which (i) there is aggregate uncertainty, (ii) attitudes towards risk and intertemporal substitution are considered apart, (iii) growth is driven by the accumulation of young individuals’ savings in the form of physical capital in an AK economy, ...

Income Tax Buyouts and Income Tax Evasion

A tax buyout is a contract between tax authorities and a tax payer which reduces the marginal income tax rate in exchange for a lump-sum payment. While previous contributions have focussed on labour supply, we consider the interaction with tax evasion and show that a buyout can increase expected tax revenues. This will be the case if (1) the audit probability is constant and the penalty for eva...

Underground Economy And Tax Gap

Money Growth Rules in an Emerging Small Open Economy with an informal sector

This paper is concerned with the saddle-path stability of monetary growth rules in a two-country two-sector dynamic stochastic general equilibrium model. Alongside standard features of emerging economies, such as a combination of producer and local currency pricing for exports, fiscal dominance and oil exports, this model also incorporates informal labour and production sectors and examines how...

Tax rates , governance , and the informal economy in high - income countries by Zoë Kuehn May 2010

Approximately 16.7% of output in high-income OECD countries is produced informally. Across these countries, the size of the informal economy is positively related to tax rates and negatively related to governance quality. While existing models of the informal economy mostly focus on developing countries, this paper studies the mechanisms behind the informal economy in high-income countries. I b...