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24
2001, Redistribution When Avoidance Behavior Is Heterogeneous
- Journal of Public Economics
"... The optimal income taxation framework is extended to account for heterogeneity in avoidance behavior. The optimal tax formulae are shown to be simply and intuitively modified to reflect the value of taxable income as an indicator of the need for transfers at a given skill level. This effect is in ad ..."
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Cited by 20 (8 self)
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The optimal income taxation framework is extended to account for heterogeneity in avoidance behavior. The optimal tax formulae are shown to be simply and intuitively modified to reflect the value of taxable income as an indicator of the need for transfers at a given skill level. This effect is in addition to any effect implied by just considering additional margins of response to taxes. Alternative sources of heterogeneity and their likely consequences are discussed. When the choice of administration is added to the model, it is demonstrated that the optimal tax system may include some seemingly wasteful avoidance schemes, even if they could be eliminated without any cost. When an avoidance scheme is more heavily used by the needy, it may provide additional redistribution without affecting standard incentive constraints. Key words: optimal income taxation, tax avoidance, tax administration
A comparison of agent-based models of income tax evasion
- Social Science Computer Review
, 2006
"... This article compares three multiagent-based simulation models of individual income tax evasion. The models’similarities and differences are highlighted, and their significance for the field of computational social science is discussed. Emphasis is placed on the importance of process validity for mo ..."
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Cited by 12 (2 self)
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This article compares three multiagent-based simulation models of individual income tax evasion. The models’similarities and differences are highlighted, and their significance for the field of computational social science is discussed. Emphasis is placed on the importance of process validity for models intended to represent real-world phenomena of interest to policy makers.
Tax simplification and tax compliance: An economic perspective
"... The gross tax gap in 2001—the amount of Federal taxes not paid voluntarily and on time—was estimated to be between $312 billion and $353 billion, or between 15 and 16.6 % of total tax liability (IRS 2005b). Clearly, enforcement of taxes in the United States is far from perfect. This essay considers ..."
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Cited by 4 (0 self)
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The gross tax gap in 2001—the amount of Federal taxes not paid voluntarily and on time—was estimated to be between $312 billion and $353 billion, or between 15 and 16.6 % of total tax liability (IRS 2005b). Clearly, enforcement of taxes in the United States is far from perfect. This essay considers the extent to which tax law should be
Increasing tax compliance in Washington state: A field experiment.
- National Tax Journal,
, 2010
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Tax non-compliance and corporate governance: a comparative study. Working paper
, 2006
"... It is generally accepted that taxes and tax evasion are intrinsically linked. While there exists an extensive knowledge base regarding tax compliance by individuals, very little is actually known about tax compliance by businesses due to a lack of detailed and readily available data. This paper uses ..."
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Cited by 3 (0 self)
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It is generally accepted that taxes and tax evasion are intrinsically linked. While there exists an extensive knowledge base regarding tax compliance by individuals, very little is actually known about tax compliance by businesses due to a lack of detailed and readily available data. This paper uses a unique and recently available dataset that contains detailed information on over 10,000 firms (broadly defined) from around the world to investigate factors, particularly corporate governance, that affect business tax compliance. The empirical strategy employed exploits the nature of the dependent variable, which is interval coded, and uses interval regression which provides an asymptotically more efficient estimator than the ordered probit, provided that the classical linear model assumptions hold. These assumptions are investigated using standard diagnostic tests that have been modified for the interval regression model. Evidence is presented that shows that firms in all regions around the world engage in tax non-compliance, but that there is substantial variation across and within regions. The legal organization of a business is found to affect tax compliance, as does size, ownership, competition and audit controls but industry and age has no effect. Not surprisingly, high taxes and
THREE ESSAYS ON THE UNDERGROUND ECONOMY SHADY TRANSACTIONS: THREE ESSAYS ON THE UNDERGROUND ECONOMY By
, 2005
"... The term "underground economy " refers to output that is produced, and income that is generated, by agents who hide this fact from authorities. There has been a recent resurgence in interest in the underground economy and this interest has predominantly been stimulated by the perception th ..."
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The term "underground economy " refers to output that is produced, and income that is generated, by agents who hide this fact from authorities. There has been a recent resurgence in interest in the underground economy and this interest has predominantly been stimulated by the perception that the underground economy is sizeable and growing. This dissertation is comprised of three essays, the goals of which are to provide empirical measures of underground activity. The first paper in this dissertation applies a modeling technique that treats the underground economy as an unobservable or latent variable and incorporates multiple indicator and multiple causal (MIMIC) variables to estimate a time-path of the size of the broadly defined underground economy. Using macroeconomic Canadian data, the results indicate that the underground economy grew steadily over the sample period: from 7.5% of Gross Domestic Product (GDP) in 1976 to about 15.3 % in 2001. The second paper uses microeconomic data and proposes a nonparametric expenditure-based approach to obtain estimates of income under-reporting by self-employed households. The approach is illustrated by estimating the effect of the Canadian Goods and Services Tax (GST) on income under-reporting. It is found that the difference between true and reported self-employment income is larger for households at the lower end of the self-employment income distribution and that there was no statistically significant change in under-reporting behaviour following the implementation of the GST. iii
A Service of zbw Leibniz-Informationszentrum Wirtschaft Leibniz Information Centre for Economics THE OCCURRENCE OF TAX AMNESTIES: THEORY AND EVIDENCE The Occurrence of Tax Amnesties: Theory and Evidence
"... Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, ..."
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Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Abstract This paper presents a theoretical model and empirical evidence to explain the occurrence of tax amnesties. We treat amnesties as endogenous, resulting from a strategic game between many taxpayers discounting future payments from punishment and a government that trades off costs and benefits of amnesty programs. From the model we derive hypotheses about the factors that should influence the occurrence of tax amnesties. For our empirical test we rely on amnesty information from US States between 1981 and 2011. In line with the theoretical model, our empirical findings suggest that the likelihood of amnesties is mainly driven by a government's fiscal requirements and the taxpayers' expectations on future amnesties. Terms of use: Documents in EconStor may
Tax Evasion, Social Customs and Optimal Auditing
"... Abstract: The optimal audit policy is analysed for an independent revenue service when a social custom exists that rewards honest tax-paying. The implication of the existence of the social custom is that in equilibrium the income level of a taxpayer cannot always be inferred exactly from their repo ..."
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Abstract: The optimal audit policy is analysed for an independent revenue service when a social custom exists that rewards honest tax-paying. The implication of the existence of the social custom is that in equilibrium the income level of a taxpayer cannot always be inferred exactly from their report. The structure of the optimal audit policy is determined both for a fixed (report-invariant) audit probability and for when the audit probability is a function of the income report. For the constant probability of audit it is shown that an interior solution exists to the decision problem of the revenue service and comparative statics results are given. When the audit probability can vary, the audit function is proved to be a decreasing function of the income report which reaches zero at the highest income report of a tax evader. Increases in the fine for evading and in the tax rate raise the optimal audit probability.