In the Allingham-Sandmo (AS) model of tax evasion, fines are paid on evaded income, whereas in the Yitzhaki (Y) model fines are levied on evaded tax. This note compares the two models. In the Y model, evasion is higher and tax revenue lower than in the AS model. If government seeks to maximize expected tax revenue, it would prefer penalties of the AS type; if it maximizes expected voter welfare, it should choose Y type penalties. A voting model to determine the penalty structure is also considered.
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Article provided by Economics Bulletin in its journal Economics Bulletin.
Volume (Year): 8 (2004) Issue (Month): 5 () Pages: 1-9 Download reference. The following formats are available: HTML,
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Handle: RePEc:ebl:ecbull:v:8:y:2004:i:5:p:1-9
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Find related papers by JEL classification: H2 - Public Economics - - Taxation, Subsidies, and Revenue D7 - Microeconomics - - Analysis of Collective Decision-Making
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
James Andreoni & Brian Erard & Jonathan Feinstein, 1998.
"Tax Compliance,"
Journal of Economic Literature,
American Economic Association, vol. 36(2), pages 818-860, June.
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