Advanced Search
MyIDEAS: Login

On tax evaders and corrupt auditors

Contents:

Author Info

  • Ksh. Jhaljit Singh
Registered author(s):

    Abstract

    This paper takes cognizance of existence of bribery-type corruption in the tax system. The study seeks to analyze the strategic interaction between a tax evader and a corrupt auditor within a given tax situation. An equilibrium bribe rule is derived for the situation where a tax evader comes face to face with a corruptible auditor. In our stylized model, situations are found where both parties adopting the agreed bribe rule, benefit from cheating the system In addition, the existence of an equilibrium point is established in a two-person fixed threat Nash bargaining situation. A comparative static exercise brings out some intuitively appealing findings. Lastly, when the probability of a super audit is internalized within the system, besides other results, we find that, in a bribe situation, the effect of neither the increase in penalty rate for evasion nor the vigilance over the activities of a tax auditor on their behavior is straightforward. Rather they are ambiguous or at best situation specific. From the policy point of view, we find that if the government is successful in keeping the value of the expected probability of super audit above some value qo, bribery will vanish from the system. The age old method of the carrot and stick policy to obtain a desirable state also gets established in our setting. Bribery can be made unprofitable by adopting an appropriate carrot and stick policy towards the corruptible auditors.

    Download Info

    If 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.
    File URL: http://www.tandfonline.com/doi/abs/10.1080/09638190701727836
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

    Bibliographic Info

    Article provided by Taylor & Francis Journals in its journal The Journal of International Trade & Economic Development.

    Volume (Year): 17 (2008)
    Issue (Month): 1 ()
    Pages: 37-67

    as in new window
    Handle: RePEc:taf:jitecd:v:17:y:2008:i:1:p:37-67

    Contact details of provider:
    Web page: http://www.tandfonline.com/RJTE20

    Order Information:
    Web: http://www.tandfonline.com/pricing/journal/RJTE20

    Related research

    Keywords: tax evader; corrupt auditor; bribe; super audit; equilibrium point; comparative statics;

    References

    No references listed on IDEAS
    You can help add them by filling out this form.

    Citations

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:taf:jitecd:v:17:y:2008:i:1:p:37-67. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Michael McNulty).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.