Auditing with Signals
AbstractWe analyse the value of information that can be used to improve the audit selection to better target the tax gap. We consider a tax authority allocating resources in an attempt to identify the taxpayers who are underreporting with more probability and to increase voluntary compliance. In a simple model, we discuss the optimal enforcement policy when the tax authority decides its auditing strategy before the taxpayers fill their report, and identify some results that contrast with the literature on optimal auditing when no signal, in addition to the tax return, is considered. In particular, we discuss the relationship between effective tax progressivity and the informational content of the signal.
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Bibliographic InfoPaper provided by University of Copenhagen. Department of Economics. Centre for Industrial Economics in its series CIE Discussion Papers with number 1999-08.
Length: 29 pages
Date of creation: Jun 1999
Date of revision:
Publication status: Published in: Economica, 69(273) pp 1-20, 2002
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More information through EDIRC
auditing; signals; tax progressivity;
Other versions of this item:
- Ines Macho-Stadler & David Perez-Castrillo, 2000. "Auditing with Signals," Econometric Society World Congress 2000 Contributed Papers 0660, Econometric Society.
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion
- K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
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.:
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"Optimal Enforcement Policy and Firms' Emissions and Compliance with Environmental Taxes,"
UFAE and IAE Working Papers
612.04, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
- Macho-Stadler, Ines & Perez-Castrillo, David, 2006. "Optimal enforcement policy and firms' emissions and compliance with environmental taxes," Journal of Environmental Economics and Management, Elsevier, vol. 51(1), pages 110-131, January.
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- Schiller, Jörg, 2002. "The impact of insurance fraud detection systems," Working Papers on Risk and Insurance 8, University of Hamburg, Institute for Risk and Insurance.
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