. The complexity of both tax code provisions and tax forms could induce taxpayers to commit errors when they fill their income reports. The existence of these involuntary mistakes affects the tax enforcement policy as tax auditors will face now two sources of uncertainty, namely, the typical one associated with taxpayers' income and that associated with report errors. Moreover, the inspection policy can be exposed to some randomness due to audit cost uncertainty. The aim of this paper is to provide an unified framework to analyze the effects of all these sources of uncertainty. In this paper we provide an unified framework to analyze the effects of all these sources of uncertainty in a model of tax compliance where the interaction between auditors and taxpayers takes the form of a principal-agent relation. We show that more complexity in the tax code increases tax compliance. The effects of audit cost uncertainty are generally ambiguous. We also discuss the implications of our model for the regressive (or progressive) bias of the effective tax system.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. 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.
Publisher Info
Paper provided by Instituto de Estudios Fiscales in its series Working Papers with number
35-03 Classification-JEL : H26..