Poverty, Taxation and Governance
Journal
Journal of International Trade & Economic Development
ISSN
0963-8199
ISSN-Digital
1879-2308
Type
journal article
Date Issued
2006-09-01
Author(s)
Abstract
In a simple model based on political support approach, we show that poor and less egalitarian societies may impose a lower tax rate contrary to the prediction of the median voter approach. This is consistent with the available empirical findings. In the framework developed in this paper, the government can strategically design a weak governance system to promote informal activities for the poor. This constitutes an alternative redistributive strategy other than the standard tax-transfer policy. The government chooses the tax rate and the degree of governance simultaneously to maximize the average income of the poor in the informal sector of the economy, i.e. those who constitute the majority and help in winning the election.
Language
English
Keywords
Taxation
inequality
governance
poverty
HSG Classification
contribution to scientific community
Refereed
Yes
Publisher
Routledge
Publisher place
London
Volume
15
Number
3
Start page
325
End page
333
Pages
9
Subject(s)
Division(s)
Eprints ID
223626