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Tax Evasion and Presumptive Taxation Methods. A Case Study in Italy: Sector Studies

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  • G. Pulina

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Abstract

In this paper we analyze a fiscal mechanism used in Italy, which in Italian is called "Studi di Settore" (Sector Studies). This mechanism relies on information gathered on taxpayers to both partition the population into fairly homogeneous clusters and to determine the presumed income they should declare. When this estimated income is announced, before taxpayers fill out their tax returns, their optimal declaration strategies lead the tax- payer population to be naturally split into three homogeneous groups, one of which pays more taxes than are due, the second group comply but bears the audit cost, while the third evades and it is not audited. This result is close to the Italian situation where the greatest number of taxpayers make a tax declaration according to the announced cluster income, but there are always those who declare less and so are audited.

Suggested Citation

  • G. Pulina, 2011. "Tax Evasion and Presumptive Taxation Methods. A Case Study in Italy: Sector Studies," Working Paper CRENoS 201120, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
  • Handle: RePEc:cns:cnscwp:201120
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    File URL: http://crenos.unica.it/crenos/node/3369
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    References listed on IDEAS

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    1. Snow, Arthur & Warren, Ronald Jr., 2005. "Tax evasion under random audits with uncertain detection," Economics Letters, Elsevier, vol. 88(1), pages 97-100, July.
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    Cited by:

    1. Rosella Levaggi & Francesco Menoncin, 2015. "Dynamic Tax Evasion with Audits based on Conspicuous Consumption," Working papers 33, Società Italiana di Economia Pubblica.
    2. Rosella Levaggi & Francesco Menoncin, 2016. "Dynamic tax evasion with audits based on visible consumption," Journal of Economics, Springer, vol. 119(2), pages 131-146, October.

    More about this item

    Keywords

    tax evasion; cut-off policy; noncooperative games; asymmetric information;

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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