Settlement in Tax Evasion Prosecution
AbstractIt is often argued that even if optimal ex-post, settlement dilutes deterrence ex-ante. We analyze the interest for the tax authority of committing, ex-ante, to a settlement strategy. We show that to commit to the use of settlements is ex-ante optimal when the tax authority receives signals that provide statistical information about the taxpayers' true tax liability. The more informative the signal, the larger the additional expected evenue raised by the tax authority when using settlement as a policy tool.
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Bibliographic InfoPaper provided by Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC) in its series UFAE and IAE Working Papers with number 495.01.
Date of creation: 02 Oct 2001
Date of revision:
Settlement; Tax evasion; Optimal auditing;
Other versions of this item:
- H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion
This paper has been announced in the following NEP Reports:
- NEP-ALL-2001-11-27 (All new papers)
- NEP-ENT-2001-11-27 (Entrepreneurship)
- NEP-NET-2001-11-27 (Network Economics)
- NEP-PBE-2001-11-27 (Public Economics)
- NEP-PUB-2001-11-27 (Public Finance)
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