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Fair Tax Evasion

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Author Info
Barth, Erling () (Insitute for Social Research and Department of Economics, University of Oslo.)
Cappelen, Alexander W. () (The Norwegian School of Economics and Business Administration.)
Ognedal, Tone () (Dept. of Economics, University of Oslo)

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Abstract

In this paper we analyse how fairness considerations, in particular considerations of just income distribution, affect whether or not people believe tax evasion can be justified and their willingness to engage in tax evasion. Using data from the Norwegian “Hidden Labour Market Survey” we show that individuals with low wages or long working hours, individuals that are treated unfairly by most tax systems, have a higher probability of justifying tax evasion. The same individuals are also more willing to take home income without reporting it to the tax authorities. These results are consistent with a model in which individuals make a trade-off between economic gains and fairness considerations when they make decisions about tax evasion. Taken together our results suggest that considerations of fair income distribution are important for the analysis of tax evasion.

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File URL: http://www.oekonomi.uio.no/memo/memopdf/memo0706.pdf
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Publisher Info
Paper provided by Oslo University, Department of Economics in its series Memorandum with number 07/2006.

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Length: 30 pages
Date of creation: 25 Apr 2006
Date of revision:
Handle: RePEc:hhs:osloec:2006_007

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Postal: Department of Economics, University of Oslo, P.O Box 1095 Blindern, N-0317 Oslo, Norway
Phone: 22 85 51 27
Fax: 22 85 50 35
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Web page: http://www.oekonomi.uio.no/indexe.html
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Related research
Keywords: Tax evasion; redistributive taxation; fair income distribution.;

Find related papers by JEL classification:
D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion

This paper has been announced in the following NEP Reports:

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Bordignon, Massimo, 1993. "A fairness approach to income tax evasion," Journal of Public Economics, Elsevier, vol. 52(3), pages 345-362, October. [Downloadable!] (restricted)
  2. Samuel Bowles & Herbert Gintis, 2000. "Reciprocity, Self-Interest and the Welfare State," Nordic Journal of Political Economy, Nordic Journal of Political Economy, vol. 26, pages 33-53. [Downloadable!]
  3. Allingham, Michael G. & Sandmo, Agnar, 1972. "Income tax evasion: a theoretical analysis," Journal of Public Economics, Elsevier, vol. 1(3-4), pages 323-338, November. [Downloadable!] (restricted)
  4. Brian Erard & Jonathan S. Feinstein, 1994. "Honesty and Evasion in the Tax Compliance Game," RAND Journal of Economics, The RAND Corporation, vol. 25(1), pages 1-19, Spring. [Downloadable!] (restricted)
    Other versions:
  5. Matthew Rabin & Richard H. Thaler, 2001. "Anomalies: Risk Aversion," Journal of Economic Perspectives, American Economic Association, vol. 15(1), pages 219-232, Winter. [Downloadable!] (restricted)
  6. Reinganum, Jennifer F & Wilde, Louis L, 1986. "Equilibrium Verification and Reporting Policies in a Model of Tax Compliance," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 27(3), pages 739-60, October. [Downloadable!] (restricted)
  7. Erling Barth & Tone Ognedal, 2005. "Unreported Labour," IZA Discussion Papers 1893, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
    • Ognedal, Tone & Barth, Erling, 2005. "Unreported Labour," Memorandum 28/2005, Oslo University, Department of Economics. [Downloadable!]
  8. Roemer, J.E., 1992. "A Pragmatic Theory of Responsibility for the Egalitarian Planner," Papers 391, California Davis - Institute of Governmental Affairs.
  9. Reinganum, Jennifer F. & Wilde, Louis L., 1985. "Income tax compliance in a principal-agent framework," Journal of Public Economics, Elsevier, vol. 26(1), pages 1-18, February. [Downloadable!] (restricted)
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