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Who Benefits from Tax Evasion?

Author

Listed:
  • James Alm

    () (Department of Economics, Tulane University)

  • Keith Finlay

    () (Department of Economics, Tulane University)

Abstract

In this paper, we examine the distributional effects of tax evasion, using results from theoretical, experimental, empirical, and especially the general equilibrium literatures on tax evasion. Much, if not all, of this evidence concludes that the main beneficiaries of successful tax evasion are the tax evaders themselves, with distributional effects that largely favor higher income individuals. However, when general equilibrium adjustments in commodity and factor prices are considered, the distributional effects become considerably more complicated. The work on tax compliance is also put in the broader context of the distributional effects of other types of criminal activities, where similar forces seem to be at work. We conclude with some suggestions for future research.

Suggested Citation

  • James Alm & Keith Finlay, 2012. "Who Benefits from Tax Evasion?," Working Papers 1214, Tulane University, Department of Economics.
  • Handle: RePEc:tul:wpaper:1214
    as

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    File URL: http://econ.tulane.edu/RePEc/pdf/tul1214.pdf
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    References listed on IDEAS

    as
    1. Alm, James & Melnik, Mikhail I., 2010. "Do Ebay Sellers Comply With State Sales Taxes?," National Tax Journal, National Tax Association, vol. 63(2), pages 215-236, June.
    2. Thalmann, Philippe, 1992. "Factor taxes and evasion in general equilibrium," Regional Science and Urban Economics, Elsevier, vol. 22(2), pages 259-283, June.
    3. Alm, James & Blackwell, Calvin & McKee, Michael, 2004. "Audit Selection and Firm Compliance With a Broad-Based Sales Tax," National Tax Journal, National Tax Association, vol. 57(2), pages 209-227, June.
    4. Alm, James & Jackson, Betty R. & McKee, Michael, 1993. "Fiscal exchange, collective decision institutions, and tax compliance," Journal of Economic Behavior & Organization, Elsevier, vol. 22(3), pages 285-303, December.
    5. James Alm & Mikhail I. Melnik, 2012. "Cross-border Shopping and State Use Tax Liabilities: Evidence from eBay Transactions," Working Papers 1205, Tulane University, Department of Economics.
    6. Rafael Di Tella & Sebastian Edwards & Ernesto Schargrodsky, 2010. "The Economics of Crime: Lessons for and from Latin America," NBER Books, National Bureau of Economic Research, Inc, number dite09-1.
    7. Schneider, Friedrich, 2005. "Shadow economies around the world: what do we really know?," European Journal of Political Economy, Elsevier, vol. 21(3), pages 598-642, September.
    8. Benno Torgler, 2007. "Tax Compliance and Tax Morale," Books, Edward Elgar Publishing, number 4096.
    9. James Alm & Sally Wallace, 2007. "Are Jamaica’s Direct Taxes on Labor “Fair†?," Public Finance Review, , vol. 35(1), pages 83-102, January.
    10. Frank A. Cowell, 1990. "Cheating the Government: The Economics of Evasion," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262532484, January.
    11. Anderson, David A, 1999. "The Aggregate Burden of Crime," Journal of Law and Economics, University of Chicago Press, vol. 42(2), pages 611-642, October.
    12. Ihlanfeldt, Keith & Mayock, Tom, 2010. "Panel data estimates of the effects of different types of crime on housing prices," Regional Science and Urban Economics, Elsevier, vol. 40(2-3), pages 161-172, May.
    13. Kehoe, Timothy J. & Serra-Puche, Jaime, 1983. "A computational general equilibrium model with endogenous unemployment : An analysis of the 1980 fiscal reform in Mexico," Journal of Public Economics, Elsevier, vol. 22(1), pages 1-26, October.
    14. Leigh Linden & Jonah E. Rockoff, 2008. "Estimates of the Impact of Crime Risk on Property Values from Megan's Laws," American Economic Review, American Economic Association, vol. 98(3), pages 1103-1127, June.
    15. Alm, James & Bahl, Roy & Murray, Matthew N, 1991. "Tax Base Erosion in Developing Countries," Economic Development and Cultural Change, University of Chicago Press, vol. 39(4), pages 849-872, July.
    16. Alm, James & Jacobson, Sarah, 2007. "Using Laboratory Experimentsin Public Economics," National Tax Journal, National Tax Association, vol. 60(1), pages 129-152, March.
    17. Pope, Jaren C., 2008. "Fear of crime and housing prices: Household reactions to sex offender registries," Journal of Urban Economics, Elsevier, vol. 64(3), pages 601-614, November.
    18. Keith Ihlanfeldt & Thomas Mayock, 2010. "Crime and Housing Prices," Chapters,in: Handbook on the Economics of Crime, chapter 12 Edward Elgar Publishing.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. James Alm, 2014. "Tax evasion, labor market effects, and income distribution," IZA World of Labor, Institute for the Study of Labor (IZA), pages 1-91, October.
    2. Branko Milanovic & Sean Higgins & Nora Lustig & Whitney Ruble & Timothy M. Smeeding, 2016. "Comparing the Incidence of Taxes and Social Spending in Brazil and the United States," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 62, pages 22-46, August.
    3. Doerrenberg, Philipp & Duncan, Denvil, 2014. "Experimental evidence on the relationship between tax evasion opportunities and labor supply," European Economic Review, Elsevier, vol. 68(C), pages 48-70.
    4. Sean Higgins, Nora Lustig, Whitney Ruble, and Timothy Smeeding, 2014. "Comparing the Incidence of Taxes and Social Spending in Brazil and the United States - Working Paper 360," Working Papers 360, Center for Global Development.
    5. Odd Erik Nygård & Joel Slemrod & Thor Olav Thoresen, 2016. "Distributional Implications of Joint Tax Evasion," CESifo Working Paper Series 5915, CESifo Group Munich.
    6. repec:eee:dyncon:v:87:y:2018:i:c:p:152-172 is not listed on IDEAS
    7. Sean Higgins & Nora Lustig & Whitney Ruble & Timothy Smeeding, 2013. "Comparing the incidence of taxes and social spending in Brazil and the United States," Commitment to Equity (CEQ) Working Paper Series 1316, Tulane University, Department of Economics.
    8. repec:spr:qualqt:v:52:y:2018:i:1:d:10.1007_s11135-017-0471-1 is not listed on IDEAS

    More about this item

    Keywords

    tax evasion; general equilibrium;

    JEL classification:

    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles

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