Does Higher Tax Morale Imply Higher Optimal Labor Income Tax Rate?

• Authors: András Simonovits
• Languages of publication: EN

Abstracts

EN

We analyze the impact of tax morale on optimal progressive labor income taxation. Only universal basic income is financed from a linear tax and the financing of public goods is neglected. Each individual supplies labor and (un)declares earning, depending on his labor disutility and tax morale. Limiting the utilitarianism to the poorer parts of the population (defined by the inclusion share), the optimal tax rate is an increasing function of the tax morale and a decreasing function of the inclusion share, provided that the average wage of those included is higher than 0.54 times the average wage.

Keywords

EN

Tax Morale; Progressive Income Tax; Undeclared Earning; Income Redistribution; Labor Supply

• Publisher: Sciendo
• Journal: DANUBE: Law and Economics Review
• Year: 2013
• Volume: 4
• Issue: 2
• Pages: 97-114

Dates

published

2013-06-01

online

2013-07-09

Contributors

author

András Simonovits

• Institute of Economics, Hungarian Academy of Sciences, Budaörsi út. 45, 1112 Budapest, Hungary

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Identifiers

DOI

10.2478/danb-2013-0005