Imperfect Detection of Tax Evasion in a Corrupt Tax Administration
AbstractThis article models the imperfect detection of tax evasion motivated by the existence of a corrupt tax administration. Consistent with previous literature, fines and audit probabilities both have a positive effect on compliance. Moreover, the model shows that they have a negative effect on the bribes paid to corrupt tax officials. More corruption decreases compliance levels, giving honest auditors incentives to work harder to detect evasion. Giving inspectors a share of the detected evasion (tax farming) makes auditors work harder; however, increasing their wages reduces their exerted effort to discover evasion. Higher compliance can as well be achieved by hiring more efficient inspectors. Copyright Springer Science+Business Media, LLC 2012
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Bibliographic InfoArticle provided by Springer in its journal Public Organization Review.
Volume (Year): 12 (2012)
Issue (Month): 4 (December)
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Web page: http://www.springerlink.com/link.asp?id=106610
Taxation; Evasion; Corruption; Tax administration;
Other versions of this item:
- Escobari, Diego, 2011. "Imperfect Detection of Tax Evasion in a Corrupt Tax Administration," MPRA Paper 39198, University Library of Munich, Germany.
- D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- H83 - Public Economics - - Miscellaneous Issues - - - Public Administration
- H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion
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