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568
Shadow economies: size, causes and consequences
- Journal of Economic Literature
, 2000
"... SHADOW OR UNDERGROUND eco-nomic activity is a fact of life around the world, and there are strong indica-tions that it is increasing. Most societies attempt to control these activities ..."
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Cited by 306 (22 self)
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SHADOW OR UNDERGROUND eco-nomic activity is a fact of life around the world, and there are strong indica-tions that it is increasing. Most societies attempt to control these activities
Cheating ourselves: The economics of tax evasion.
- Journal of Economic Perspectives,
, 2007
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Income Tax Compliance in a PrincipalAgent Framework
- Journal of Public Economics
, 1985
"... Previous analyses have modeled income tax evasion as a ‘portfolio problem’, deriving the optimal consumption of the ‘risky asset ’ (unreported income) assuming a fixed probability of detection. We compare an alternative audit policy to the standard random audit policy. We focus on an ‘audit cut08 po ..."
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Cited by 103 (0 self)
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Previous analyses have modeled income tax evasion as a ‘portfolio problem’, deriving the optimal consumption of the ‘risky asset ’ (unreported income) assuming a fixed probability of detection. We compare an alternative audit policy to the standard random audit policy. We focus on an ‘audit cut08 policy, in which an agent triggers an audit if reported income is ‘too low’, and is not audited if reported income is ‘sufficiently high’. We find that random audit rules are weakly dominated by audit cutoff rules. Given lump-sum taxes and tines, audit cutoff rules are the least-cost policies which induce truthful reporting of income. 1.
Tax Rates and Tax Evasion: Evidence from Missing Imports in China.
- Journal of Political Economy,
, 2004
"... Abstract Tax evasion, by its very nature, is difficult to observe. In this paper, we examine tax evasion in China using a new technique: by comparing the values that China reports as imports from Hong Kong, with what Hong Kong reports as exports to China. Since our data are at a very disaggregated ..."
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Cited by 102 (5 self)
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Abstract Tax evasion, by its very nature, is difficult to observe. In this paper, we examine tax evasion in China using a new technique: by comparing the values that China reports as imports from Hong Kong, with what Hong Kong reports as exports to China. Since our data are at a very disaggregated level of individual products, we can measure evasion relatively precisely. Matching up this 'evasion gap' with the tariff (and VAT tax) schedule at the product level, we examine the effect of tax rates on tax evasion. The result is striking: using data from 1998, we find that on average, a 1 percent increase in the tax rate is associated with a 3 percent increase in evasion. The result is similar when a first-difference specification is used with data from 1997 and 1998. This relationship is nonlinear: the evasion elasticity is larger at higher tax levels. Furthermore, the evasion gap is negatively correlated with tax rates on closely related products, suggesting that evasion takes place partly through misreporting of the type of imports, in addition to under-reporting the value of imports. This effect is even more pronounced when the evasion gap is measured using quantities rather than values. JEL Classification: H2, F1
Trust Breeds Trust: How Taxpayers are Treated
- Economics of Governance
, 2002
"... Tax compliance has been studied in economics by analysing the individual decision of a representative person between paying and evading taxes. A neglected aspect of tax compliance is the interaction of taxpayers and tax authorities. The relationship between the two actors can be understood as an imp ..."
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Cited by 83 (6 self)
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Tax compliance has been studied in economics by analysing the individual decision of a representative person between paying and evading taxes. A neglected aspect of tax compliance is the interaction of taxpayers and tax authorities. The relationship between the two actors can be understood as an implicit or "psychological " contract. Studies on tax evasion in Switzerland show that the more strongly the political participation rights are developed, the more important this contract is, and the higher tax morale is. In this paper, empirical evidence based on a survey of tax authorities of the 26 Swiss states (cantons) is presented, indicating that the differences in the treatment of taxpayers by tax authorities can be explained by differences in political participation rights as well.
Decentralizing Antipoverty Program Delivery in Developing Countries
- Journal of Public Economics
, 2005
"... We study effects on accountability in government service delivery of decentralizing administration of an antipoverty program. While governments at both central and local levels are vulnerable to anti-poor policy biases owing to political capture, centralized delivery systems are additionally prone t ..."
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Cited by 69 (4 self)
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We study effects on accountability in government service delivery of decentralizing administration of an antipoverty program. While governments at both central and local levels are vulnerable to anti-poor policy biases owing to political capture, centralized delivery systems are additionally prone to bureaucratic corruption owing to problems in monitoring bureaucratic performance. Decentralizing the delivery system promotes cost-effectiveness and improves intra-regional targeting at low program scales. But inter-regional targeting may deteriorate, as central grants to high poverty regions shrink, owing to high capture of local governments by local elites in such regions.
Tax morale and conditional cooperation
- JOURNAL OF COMPARATIVE ECONOMICS 35 (1) (2007) 136–159
, 2007
"... Why so many people pay their taxes, even though fines and audit probability are low, is a central question in the tax compliance literature. Positing a homo oeconomicus having a refined motivation structure sheds light on this puzzle. This paper provides empirical evidence for the relevance of condi ..."
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Cited by 61 (7 self)
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Why so many people pay their taxes, even though fines and audit probability are low, is a central question in the tax compliance literature. Positing a homo oeconomicus having a refined motivation structure sheds light on this puzzle. This paper provides empirical evidence for the relevance of conditional cooperation, using survey data from 30 West and East European countries. We find a high correlation between perceived tax evasion and tax morale. The results remain robust after exploiting endogeneity and conducting several robustness tests. We also observe a strong positive correlation between institutional quality and tax morale.
Strategic Communication with Lying Costs
- Review of Economic Studies
, 2009
"... Abstract. I study a model of strategic communication between an informed Sender and an uninformed Receiver. The Sender bears a cost of lying, or more broadly, of misrepresenting his private information. The main results show that inflated language naturally arises in this environment, where the Send ..."
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Cited by 60 (2 self)
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Abstract. I study a model of strategic communication between an informed Sender and an uninformed Receiver. The Sender bears a cost of lying, or more broadly, of misrepresenting his private information. The main results show that inflated language naturally arises in this environment, where the Sender (almost) always claims to be a higher type than he would under complete information. Regardless of the intensity of lying cost, there is incomplete separation, with some pooling on the highest messages. The degree of language inflation and how much information is revealed depends upon the intensity of lying cost. The analysis delivers a framework to span a class of cheap talk and verifiable disclosure games, unifying the polar predictions they make under large conflicts of interest. I apply the model to highlight how the degree of manipulability of information can affect the tradeoff between delegation and communication.
A General Model of the Behavioral Response to Taxation
- International Tax and Public Finance 8 No
, 2001
"... This paper generalizes the standard model of how taxes affect the labor-leisure choice by allowing individuals to change both their labor supply and avoidance effort in response to tax changes. Doing so reveals that the income and substitution effect of taxes depend on both preferences and the avoid ..."
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Cited by 50 (10 self)
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This paper generalizes the standard model of how taxes affect the labor-leisure choice by allowing individuals to change both their labor supply and avoidance effort in response to tax changes. Doing so reveals that the income and substitution effect of taxes depend on both preferences and the avoidance technology. Econometric analysis will not in general allow one to separately identify the two influences, unless one can specify observable determinants of the cost of avoidance. The effective marginal tax rate on working must be modified by the addition of an avoidance-facilitating effect, which measures how the cost of avoidance changes with higher income. This model provides a conceptual structure for evaluating to what extent, and in what situations, the opportunities for tax avoidance mitigate the real substitution response to taxation.
2005), Corporate tax evasion with agency costs
- Journal of Public Economics
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