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Income Tax Evasion Dynamics: Evidence from an Agent-based Econophysics Model

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  • Michael Pickhardt
  • Goetz Seibold

Abstract

We analyze income tax evasion dynamics in a standard model of statistical mechanics, the Ising model of ferromagnetism. However, in contrast to previous research, we use an inhomogeneous multi-dimensional Ising model where the local degrees of freedom (agents) are subject to a specific social temperature and coupled to external fields which govern their social behavior. This new modeling frame allows for analyzing large societies of four different and interacting agent types. As a second novelty, our model may reproduce results from agent-based models that incorporate standard Allingham and Sandmo tax evasion features as well as results from existing two-dimensional Ising based tax evasion models. We then use our model for analyzing income tax evasion dynamics under different enforcement scenarios and point to some policy implications.

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File URL: http://arxiv.org/pdf/1112.0233
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Paper provided by arXiv.org in its series Papers with number 1112.0233.

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Date of creation: Dec 2011
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Handle: RePEc:arx:papers:1112.0233

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  5. James Alm & Erich Kirchler & Stephan Muehlbacher, 2012. "Combining Psychology and Economics in the Analysis of Compliance: From Enforcement to Cooperation," Economic Analysis and Policy (EAP), Queensland University of Technology (QUT), School of Economics and Finance, Queensland University of Technology (QUT), School of Economics and Finance, vol. 42(2), pages 133-152, September.
  6. Seibold, Götz & Pickhardt, Michael, 2013. "Lapse of time effects on tax evasion in an agent-based econophysics model," Physica A: Statistical Mechanics and its Applications, Elsevier, Elsevier, vol. 392(9), pages 2079-2087.
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  21. Sascha Hokamp & Michael Pickhardt, . "Income Tax Evasion in a Society of Heterogeneous Agents – Evidence from an Agent-based Model," Working Papers, Institute of Spatial and Housing Economics, Munster Universitary 201035, Institute of Spatial and Housing Economics, Munster Universitary.
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Cited by:
  1. Paolo Pellizzari & Dino Rizzi, 2012. "Citizenship and Power in an Agent-based Model of Tax Compliance with Public Expenditure," Working Papers 2012_24, Department of Economics, University of Venice "Ca' Foscari", revised 2012.
  2. Dino Rizzi, 2012. "Tax Evasion Indices and Profiles," Working Papers 2012:37, Department of Economics, University of Venice "Ca' Foscari", revised 2012.
  3. Hokamp, Sascha, 2014. "Dynamics of tax evasion with back auditing, social norm updating, and public goods provision – An agent-based simulation," Journal of Economic Psychology, Elsevier, Elsevier, vol. 40(C), pages 187-199.

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