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Timing tax evasion

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  • Niepelt, Dirk

Abstract

Standard models of tax evasion implicitly assume that evasion is either fully detected, or not detected at all. Empirically, this is not the case, casting into doubt the traditional rationales for interior evasion choices. I propose two alternative, dynamic explanations for interior tax evasion rates: Fines depending on the duration of an evasion spell, and different vintages of income sources subject to aggregate risk and fixed costs when switched between evasion states. The dynamic approach yields a transparent representation of revenue losses and social costs due to tax evasion, novel findings on the effect of policy on tax evasion, and a tractable framework for the analysis of tax evasion dynamics.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Public Economics.

Volume (Year): 89 (2005)
Issue (Month): 9-10 (September)
Pages: 1611-1637

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Handle: RePEc:eee:pubeco:v:89:y:2005:i:9-10:p:1611-1637

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Web page: http://www.elsevier.com/locate/inca/505578

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Cited by:
  1. Ratbek Dzhumashev & Emin Gahramanov, 2008. "Can We Tax the Desire for Tax Evasion?," Economics Series 2008_19, Deakin University, Faculty of Business and Law, School of Accounting, Economics and Finance.
  2. Prado, Mauricio, 2011. "Government policy in the formal and informal sectors," European Economic Review, Elsevier, vol. 55(8), pages 1120-1136.
  3. Annette Alstadsæter & Martin Jacob, 2013. "The Effect of Awareness and Incentives on Tax Evasion," CESifo Working Paper Series 4369, CESifo Group Munich.
  4. Ratbek Dzhumashev & Emin Gahramanov, 2010. "A Growth Model with Income Tax Evasion: Some Implications for Australia," The Economic Record, The Economic Society of Australia, vol. 86(275), pages 620-636, December.
  5. Levaggi, Rosella & Menoncin, Francesco, 2012. "Tax audits, fines and optimal tax evasion in a dynamic context," Economics Letters, Elsevier, vol. 117(1), pages 318-321.

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