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Who Benefits from Tax Evasion?

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  • James Alm

    ()
    (Department of Economics, Tulane University, 6823 St. Charles Avenue, 208 Tilton Hall, New Orleans, LA 70118, U.S.A.)

  • Keith Finlay

    (Department of Economics, Tulane University, 6823 St. Charles Avenue, 208 Tilton Hall, New Orleans, LA 70118, U.S.A.)

Abstract

In this paper, we examine the distributional effects of tax evasion, using results from theoretical, experimental, empirical, and especially the general equilibrium literatures on tax evasion. Much – if not all – of this evidence concludes that the main beneficiaries of successful tax evasion are the tax evaders themselves, with distributional effects that largely favor higher income individuals. However, when general equilibrium adjustments in commodity and factor prices are considered, the distributional effects become considerably more complicated. The work on tax compliance is also put in the broader context of the distributional effects of other types of criminal activities, where similar forces seem to be at work. We conclude with some suggestions for future research.

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Bibliographic Info

Article provided by Queensland University of Technology (QUT), School of Economics and Finance in its journal Economic Analysis and Policy (EAP).

Volume (Year): 43 (2013)
Issue (Month): 2 (September)
Pages: 139-154

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Handle: RePEc:eap:articl:v:43:y:2013:i:2:p:139-154

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  1. Leigh Linden & Jonah E. Rockoff, 2008. "Estimates of the Impact of Crime Risk on Property Values from Megan's Laws," American Economic Review, American Economic Association, vol. 98(3), pages 1103-27, June.
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  8. Arnold C. Harberger, 1962. "The Incidence of the Corporation Income Tax," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 70, pages 215.
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  10. Furlong, William J., 1987. "A general equilibrium model of crime commission and prevention," Journal of Public Economics, Elsevier, vol. 34(1), pages 87-103, October.
  11. Frank A. Cowell, 1990. "Cheating the Government: The Economics of Evasion," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262532484, December.
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  13. Persson, Mats & Wissen, Pehr, 1984. " Redistributional Aspects of Tax Evasion," Scandinavian Journal of Economics, Wiley Blackwell, vol. 86(2), pages 131-49.
  14. Allingham, Michael G. & Sandmo, Agnar, 1972. "Income tax evasion: a theoretical analysis," Journal of Public Economics, Elsevier, vol. 1(3-4), pages 323-338, November.
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  16. Alm, James & Jacobson, Sarah, 2007. "Using Laboratory Experimentsin Public Economics," National Tax Journal, National Tax Association, vol. 60(1), pages 129-52, March.
  17. Alm, James & Bahl, Roy & Murray, Matthew N, 1991. "Tax Base Erosion in Developing Countries," Economic Development and Cultural Change, University of Chicago Press, vol. 39(4), pages 849-72, July.
  18. Alm, James & Melnik, Mikhail I., 2010. "Do Ebay Sellers Comply With State Sales Taxes?," National Tax Journal, National Tax Association, vol. 63(2), pages 215-36, June.
  19. Kehoe, Timothy J. & Serra-Puche, Jaime, 1983. "A computational general equilibrium model with endogenous unemployment : An analysis of the 1980 fiscal reform in Mexico," Journal of Public Economics, Elsevier, vol. 22(1), pages 1-26, October.
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Cited by:
  1. Philipp Doerrenberg & Denvil Duncan, 2012. "Experimental Evidence on the Relationship between Tax Evasion Opportunities and Labor Supply," Cologne Graduate School Working Paper Series 03-10, Cologne Graduate School in Management, Economics and Social Sciences.
  2. Sean Higgins & Nora Lustig & Whitney Ruble & Timothy Smeeding, 2013. "Comparing the Incidence of Taxes and Social Spending in Brazil and the United States," Working Papers, Tulane University, Department of Economics 1317, Tulane University, Department of Economics.
  3. Sean Higgins, Nora Lustig, Whitney Ruble, and Timothy Smeeding, 2014. "Comparing the Incidence of Taxes and Social Spending in Brazil and the United States - Working Paper 360," Working Papers 360, Center for Global Development.

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