Optimal Income Tax Structure with Favoritism
This paper clarifies that in any society, when stricter penalties for tax evasion are sought based on the permeation of the idea that high-income earners should not be permitted to evade taxes for their personal gain, the government inadvertently creates a larger tax burden on the poor. In other words, a policy decision conferring preferential treatment or favoritism on the poor is incompatible with stricter penalties.
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