Search results
Results from the WOW.Com Content Network
Several theories of taxation exist in public economics. Governments at all levels (national, regional and local) need to raise revenue from a variety of sources to finance public-sector expenditures .
An informal economy (informal sector or grey economy) [1] [2] is the part of any economy that is neither taxed nor monitored by any form of government. Although the informal sector makes up a significant portion of the economies in developing countries, it is sometimes stigmatized as troublesome and unmanageable.
Optimal tax theory or the theory of optimal taxation is the study of designing and implementing a tax that maximises a social welfare function subject to economic constraints. [1] The social welfare function used is typically a function of individuals' utilities , most commonly some form of utilitarian function, so the tax system is chosen to ...
Developing countries have an informal sector representing an average of around 40%, perhaps up to 60% in some. [72] Informal sectors feature many small informal traders who may not be efficient in bringing into the tax net since the cost of collection is high and revenue potential limited (although there are broader governance benefits).
Agricultural productivity decreases, lowering marginal productivity and wages in the agricultural sector (w A), decreasing the expected rural income. However, even though this migration creates unemployment and induces informal sector growth, this behavior is economically rational and utility-maximizing in the context of the Harris–Todaro model.
The modern literature on optimal labour income taxation largely follows from James Mirrlees' "Exploration in the Theory of Optimum Income Taxation". [1] The approach is based on asymmetric information, as the government is assumed to be unable to observe the number of hours people work or how productive they are, but can observe individuals' incomes.
One route is for the municipalities to act as a cartel, enforcing a singular tax rate among the various communities. In his paper, Tiebout claims this would shrink the right of voice and exit to the individual. The other option is for the municipalities to engage in tax competition. Tiebout claims the end result of both options is the same, as ...
Non-linear income taxation can be used by the government and was in a seminal article by Joseph Stiglitz and Anthony Atkinson in 1976. [1] The Atkinson–Stiglitz theorem is an important theoretical result in public economics, spawning a broad literature that delimited the conditions under which the theorem holds.