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 revenue raised by the tax authority when using settlement as a policy tool.
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Bibliographic InfoPaper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 814.
Date of creation: 2002
Date of revision:
enforcement of the law; settlement; tax evasion;
Other versions of this item:
- InÃ©s Macho-Stadler & David PÃ©rez-Castrillo, 2004. "Settlement in Tax Evasion Prosecution," Economica, London School of Economics and Political Science, London School of Economics and Political Science, vol. 71(283), pages 349-368, 08.
- H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion
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