Hidden Economies and the Socially Optimal Fiscal- Tax to Liquidity-Tax Ratio
نویسنده
چکیده
Differential tax analysis is used to show how the socially optimal fiscal-tax to liquidity-tax ratio changes with the relative size of the tax-evading hidden economy. The smaller the relative size of the hidden economy, the larger the optimal fiscal-tax to liquidity-tax ratio. The empirical cross-section and panel evidence supports this theoretical result. JEL: E31, E52, H21, O17
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