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The crime and the rationality in the area of tax evasions and tax arrears

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  • Tomáš Kouba

Abstract

This article explains behavior of fiscal deceiver who is aversive to a risk as rational and economic behavior. This fiscal deceiver contemplates and costs against possible utility during the tampering of the law (tax) standards. Within this article is the decision making of the fiscal deceiver demonstrated in four simple model examples. The main objective of this paper is to show by using model examples the behavior of individuals at risk in the context of paying taxes and to draw appropriate measures from these examples to increase tax collection (thus reducing the advantages of tax evasion and increase its detection). As an appropriate and effective measures can be recommended the increase of fines and restrictions on registration in Prague. To increase the frequency of tax audits and the implementation of general measures, such as inspection reports, is certainly not a good idea because it is expensive for tax payers and the state.

Suggested Citation

  • Tomáš Kouba, 2016. "The crime and the rationality in the area of tax evasions and tax arrears," Český finanční a účetní časopis, University of Economics, Prague, vol. 2016(1), pages 83-97.
  • Handle: RePEc:prg:jnlcfu:v:2016:y:2016:i:1:id:469:p:83-97
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    References listed on IDEAS

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    1. Cemile Sancak & Jing Xing & Ricardo Velloso, 2010. "Tax Revenue Response to the Business Cycle," IMF Working Papers 10/71, International Monetary Fund.
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    More about this item

    Keywords

    Crime; Tax evasion; Tax underpayment (Tax arrears); Rationality; Utility; Risk aversion; Decision making; Entrepreneurship; Zločin; Daňový únik; Daňový nedoplatek; Racionalita; Užitek; Averze k riziku; Rozhodování; Podnikání;

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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