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Advance Tax Payments And Tax Evasion: A Note

Author

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  • KEISUKE MORITA

    () (Faculty of Economics, Kyoto Gakuen University, Nanjo-Otani 1-1, Sogabe, Kameoka, Kyoto 621-8555, Japan)

Abstract

In the withholding tax system, the tax authority requires taxpayers to pay taxes in advance before filing their tax returns. This note investigates how advance tax payments affect the extent of tax evasion in the economy. We show that the extent of tax evasion decreases with increasing prepaid taxes, if individuals behave according to prospect theory.

Suggested Citation

  • Keisuke Morita, 2015. "Advance Tax Payments And Tax Evasion: A Note," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 60(05), pages 1-10, December.
  • Handle: RePEc:wsi:serxxx:v:60:y:2015:i:05:n:s0217590814500507
    DOI: 10.1142/S0217590814500507
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    References listed on IDEAS

    as
    1. Elffers, Henk & Hessing, Dick J., 1997. "Influencing the prospects of tax evasion," Journal of Economic Psychology, Elsevier, vol. 18(2-3), pages 289-304, April.
    2. Ravi Kanbur & Jukka Pirttilä & Matti Tuomala, 2008. "Moral Hazard, Income Taxation and Prospect Theory," Scandinavian Journal of Economics, Wiley Blackwell, vol. 110(2), pages 321-337, June.
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