Tax Compliance With Two-Sided Uncertainty
AbstractDoes government concealment of its audit policies increase or decrease taxpayer compliance? This article analyzes the impact of uncertainty about government audit policies on compliance using a game-theoretic model. The taxpayer is assumed to possess private information about his or her income, but does not know the tax agency's true audit capabilities. Similarly, the tax agency is assumed to possess private information about its audit technology (e.g., the cost of an audit or the probability that an audit will discover unreported income), but does not know a taxpayer's true income. The equilibrium of this game with two-sided uncertainty is determined and analyzed. The equilibrium is also compared to that of a game in which the taxpayer knows the tax agency's audit parameters. The results show that uncertain audit policies may well lead to less compliance, so that a government policy of concealment may be counterproductive.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by in its journal Public Finance Review.
Volume (Year): 23 (1995)
Issue (Month): 2 (April)
Contact details of provider:
Other versions of this item:
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Kim, Sangheon, 2008. "Does political intention affect tax evasion?," Journal of Policy Modeling, Elsevier, Elsevier, vol. 30(3), pages 401-415.
- Philipp Meyer-Brauns, 2014. "Optimal Auditing with Heterogeneous Audit Perceptions," Working Papers, Max Planck Institute for Tax Law and Public Finance tax-mpg-rps-2014-06, Max Planck Institute for Tax Law and Public Finance.
- James, Simon & Edwards, Alison, 2010. "An annotated bibliography of tax compliance and tax compliance costs," MPRA Paper 26106, University Library of Munich, Germany.
- Simone Pellegrino & Massimiliano Piacenza & Gilberto Turati, 2008. "The Runaway Taxpayer or: Is Prior Tax Notice Effective against Scofflaws?," Working papers, Former Department of Economics and Public Finance "G. Prato", University of Torino 1, Former Department of Economics and Public Finance "G. Prato", University of Torino.
- Lang, Matthias & Wambach, Achim, 2013.
"The fog of fraud â€“ Mitigating fraud by strategic ambiguity,"
Games and Economic Behavior, Elsevier,
Elsevier, vol. 81(C), pages 255-275.
- Matthias Lang & Achim Wambach, 2010. "The fog of fraud â€“ mitigating fraud by strategic ambiguity," Working Paper Series of the Max Planck Institute for Research on Collective Goods, Max Planck Institute for Research on Collective Goods 2010_24, Max Planck Institute for Research on Collective Goods.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (SAGE Publications).
If references are entirely missing, you can add them using this form.