Tax compliance has been studied in economics by analysing the individual decision of a representative person between paying and evading taxes. A neglected aspect of tax compliance is the interaction of taxpayers and tax authorities. The relationship between the two actors can be understood as an implicit or “psychological” contract. Studies on tax evasion in …
Tag Archives: Tax evasion
Frey, B., &Feld, L. (2002). Deterrence and morale in taxation: An empirical analysis.
The standard model of tax evasion based on the subjective expected utility maximization does not perform particularly well in econometric analyses: It predicts too little evasion and produces unsatisfactory econometric parameter estimates. The model is extended by looking at how the tax authority deals with the taxpayers. Based on econometric estimates, it is shown that …
Sandmo, A. (2005). The theory of tax evasion: A retrospective view. National Tax Journal, 643-663.
The paper gives an overview of some main themes in the theory of tax evasion, starting from Allingham and Sandmo (1972). It reviews the comparative statics of the original model of individual behavior where the tax evasion decision is analogous to portfolio choice, and its extensions to incorporate socially conscious behavior, participation in the …