Corruption and Tax Structure

What is it about?

Corruption affects tax structure. Taxpayers are likely to bear heavier tax burden in a more corrupt state. A more corrupt state relies more on indirect taxes, which makes its tax system less transparent and less progressive. A more corrupt state tends to shift tax burden from businesses to individuals.

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Why is it important?

Policy makers must consider the harmful impact of corruption when they make some reformative actions on tax structure. The harmful effects of corruption on public finances in developed countries are less investigated by the existing literature, which are the main topics of the paper.

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