Advanced Search
MyIDEAS: Login to save this paper or follow this series

Why Pay Taxes When No One Else Does?

Contents:

Author Info

  • Epstein, Gil S.

    ()
    (Bar-Ilan University)

  • Gang, Ira N.

    ()
    (Rutgers University)

Abstract

In this paper we try to understand the phenomena whereby a large proportion of the population evades tax payments. We present a model which incorporates elements from the theory of information cascades with the standard model of tax evasion and analyze the connection between the decision of a potential tax evader, the number of tax evaders and the number caught in previous periods. General conditions exist under which any expected utility maximizing tax evaders will decide to emulate other tax evaders.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. 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.
File URL: http://ftp.iza.org/dp4153.pdf
Download Restriction: no

Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4153.

as in new window
Length: 22 pages
Date of creation: Apr 2009
Date of revision:
Publication status: published in: Review of Development Economics, 2010, 14 (2), 374-385
Handle: RePEc:iza:izadps:dp4153

Contact details of provider:
Postal: IZA, P.O. Box 7240, D-53072 Bonn, Germany
Phone: +49 228 3894 223
Fax: +49 228 3894 180
Web page: http://www.iza.org

Order Information:
Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany
Email:

Related research

Keywords: information cascades; tax evasion; uncertainty;

Other versions of this item:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

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.:
as in new window
  1. Hunt, Jennifer, 2004. "Trust and Bribery: The Role of the Quid Pro Quo and the Link With Crime," CEPR Discussion Papers, C.E.P.R. Discussion Papers 4567, C.E.P.R. Discussion Papers.
  2. Fishlow, Albert & Friedman, Jorge, 1994. "Tax evasion, inflation and stabilization," Journal of Development Economics, Elsevier, Elsevier, vol. 43(1), pages 105-123, February.
  3. Scharfstein, David. & Stein, Jeremy C., 1988. "Herd behavior and investment," Working papers, Massachusetts Institute of Technology (MIT), Sloan School of Management WP 2062-88., Massachusetts Institute of Technology (MIT), Sloan School of Management.
  4. de Juan, Ana & Lasheras, Miguel A & Mayo, Rafaela, 1994. "Voluntary Tax Compliant Behavior of Spanish Income Tax Payers," Public Finance = Finances publiques, , , vol. 49(Supplemen), pages 90-105.
  5. Frank Flatters & W. Macleod, 1995. "Administrative corruption and taxation," International Tax and Public Finance, Springer, Springer, vol. 2(3), pages 397-417, October.
  6. Peter Stella, 1993. "Tax Farming: A Radical Solution for Developing Country Tax Problems?," IMF Staff Papers, Palgrave Macmillan, vol. 40(1), pages 217-225, March.
  7. Andreoni, J. & Erard, B. & Feinstein, J., 1996. "Tax Compliance," Working papers, Wisconsin Madison - Social Systems 9610r, Wisconsin Madison - Social Systems.
  8. Allingham, Michael G. & Sandmo, Agnar, 1972. "Income tax evasion: a theoretical analysis," Journal of Public Economics, Elsevier, Elsevier, vol. 1(3-4), pages 323-338, November.
  9. Epstein, Gil S, 2002. "Informational Cascades and Decision to Migrate," CEPR Discussion Papers, C.E.P.R. Discussion Papers 3287, C.E.P.R. Discussion Papers.
  10. Sanyal, Amal & Gang, Ira N & Goswami, Omkar, 2000. " Corruption, Tax Evasion and the Laffer Curve," Public Choice, Springer, Springer, vol. 105(1-2), pages 61-78, October.
  11. Gautam Bose & Shubhashis Gangopadhyay, 2009. "Intermediation in corruption markets," Indian Growth and Development Review, Emerald Group Publishing, Emerald Group Publishing, vol. 2(1), pages 39-55, April.
  12. Myles, Gareth D. & Naylor, Robin A., 1996. "A model of tax evasion with group conformity and social customs," European Journal of Political Economy, Elsevier, vol. 12(1), pages 49-66, April.
  13. Arindam Das-Gupta & Radhika Lahiri & Dilip Mookherjee, 1995. "Income Tax Compliance in India: An Empirical Analysis," Boston University - Institute for Economic Development, Boston University, Institute for Economic Development 57, Boston University, Institute for Economic Development.
  14. Fajnzylber, Pablo & Lederman, Daniel & Loayza, Norman, 2002. "What causes violent crime?," European Economic Review, Elsevier, Elsevier, vol. 46(7), pages 1323-1357, July.
  15. Geeroms, Hans J A & Wilmots, Hendrik, 1985. "An Empirical Model of Tax Evasion and Tax Avoidance," Public Finance = Finances publiques, , , vol. 40(2), pages 190-209.
  16. Arindam Das-Gupta & Ira Gang, 2000. "Decomposing Revenue Effects of Tax Evasion and Tax Structure Changes," International Tax and Public Finance, Springer, Springer, vol. 7(2), pages 177-194, March.
  17. Yitzhaki, Shlomo, 1974. "Income tax evasion: A theoretical analysis," Journal of Public Economics, Elsevier, Elsevier, vol. 3(2), pages 201-202, May.
  18. George A. Akerlof, 1978. "A theory of social custom, of which unemployment may be one consequence," Special Studies Papers, Board of Governors of the Federal Reserve System (U.S.) 118, Board of Governors of the Federal Reserve System (U.S.).
  19. Pommerehne, Werner W & Hart, Albert & Frey, Bruno S, 1994. "Tax Morale, Tax Evasion and the Choice of Policy Instruments in Different Political Systems," Public Finance = Finances publiques, , , vol. 49(Supplemen), pages 52-69.
  20. Ira N. Gang & Arindam Das-Gupta, 1998. "Value Added Tax Evasion, Auditing and Transactions Matching," Departmental Working Papers, Rutgers University, Department of Economics 199607, Rutgers University, Department of Economics.
  21. Banerjee, Abhijit V, 1992. "A Simple Model of Herd Behavior," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 107(3), pages 797-817, August.
  22. Gul, Faruk & Lundholm, Russell, 1995. "Endogenous Timing and the Clustering of Agents' Decisions," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 103(5), pages 1039-66, October.
Full references (including those not matched with items on IDEAS)

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp4153. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Fallak).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.