Lessons from the Russia’s 2001 Flat Tax Reform

Yuriy Gorodnichenko, Jorge Martinez-Vazquez , Klara Sabirianova Peter 19 February 2008

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Tax evasion is a pervasive worldwide phenomenon. It is widely believed that high personal income tax rates are partially responsible for high levels of tax evasion everywhere, especially in emerging markets. High personal income tax rates are also often associated with negative effects on the real side of the economy. Indeed, the high elasticity of taxable income with respect to tax rates typically reported in the public finance literature implies sizable deadweight losses in the presence of high personal income tax rates (e.g., Feldstein, 1995).

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Topics:  Taxation

Tags:  Russia, flat tax, tax evasion