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Tax Evasion In Italy: An Analysis Using A Tax-Benefit Microsimulation Model

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  • Carlo V Fiorio
  • Francesco D'Amuri

Abstract

In this paper, the authors use a direct method to estimate tax evasion in Italy assuming that tax evaders might consider declaring a closer-to-true income in an anonymous interview. The methodology is applied to work income only, as pension income cannot be hidden to tax authorities and capital income is measured with large error in available survey data sets. The data sets considered are the 1998 and 2000 Survey of Household Income and Wealth (SHIW) by the Bank of Italy and the 1998 and 2000 tax forms table produced by Servizio Consultivo ed Ispettivo Tributario (SeCIT). Posing particular attention to the post-stratification of the data, the authors find that tax evasion is consistently higher for self-employment income than for employment income and it is larger at bottom deciles, although some under-sampling problems need to be considered. The pattern of work income concealment found, shows that personal income tax evasion reduces the average tax rate but it also increases the progressivity of the tax system. This result is, however, driven by the large values of income avoidance found in bottom deciles, which might be due to the under-sampling of income receivers with the poorest income. The results are consistent across the two years considered.

Suggested Citation

  • Carlo V Fiorio & Francesco D'Amuri, 2006. "Tax Evasion In Italy: An Analysis Using A Tax-Benefit Microsimulation Model," The IUP Journal of Public Finance, IUP Publications, vol. 0(2), pages 19-37, May.
  • Handle: RePEc:icf:icfjpf:v:04:y:2006:i:2:p:19-37
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    Citations

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    Cited by:

    1. Leopoldo Fergusson & Carlos Molina & Juan Felipe Riaño, 2017. "I evade taxes, and so what? A new database and evidence from Colombia," DOCUMENTOS CEDE 015444, UNIVERSIDAD DE LOS ANDES-CEDE.
    2. Andrea Albarea & Michele Bernasconi & Cinzia Di Novi & Anna Marenzi & Dino Rizzi & Francesca Zantomio, 2015. "Accounting for Tax Evasion Profiles and Tax Expenditures in Microsimulation Modelling. The BETAMOD Model for Personal Income Taxes in Italy," International Journal of Microsimulation, International Microsimulation Association, vol. 8(3), pages 99-136.
    3. Francesco Figari & Maria Iacovou & Alexandra Skew & Holly Sutherland, 2012. "Approximations to the Truth: Comparing Survey and Microsimulation Approaches to Measuring Income for Social Indicators," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 105(3), pages 387-407, February.
    4. Mariña Fernández Salgado & Francesco Figari & Holly Sutherland & Alberto Tumino, 2014. "Welfare Compensation for Unemployment in the Great Recession," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 60(S1), pages 177-204, May.
    5. Manuela Coromaldi & Mariangela Zoli, 2012. "Deriving Multidimensional Poverty Indicators: Methodological Issues and an Empirical Analysis for Italy," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 107(1), pages 37-54, May.
    6. repec:fan:epepep:v:html10.3280/ep2017-001002 is not listed on IDEAS
    7. Figari, Francesco & Matsaganis, Manos & Sutherland, Holly, 2011. "The financial well-being of older people in Europe and the redistributive effects of minimum pension schemes," EUROMOD Working Papers EM7/11, EUROMOD at the Institute for Social and Economic Research.

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