Feasible Net Income Distributions under Income Tax Evasion: An Equilibrium Analysis

Autor:	Irit Talmor, Michael Landsberger, Dov Monderer
Rok vydání:	2000
Předmět:	Economics and Econometrics Double taxation Write-off Sociology and Political Science Public economics Gross income ComputingMilieux_LEGALASPECTSOFCOMPUTING Adjusted gross income International taxation Microeconomics Income tax State income tax Economics Finance Indirect tax
Zdroj:	Journal of Public Economic Theory. 2:135-153
ISSN:	1467-9779 1097-3923
DOI:	10.1111/1097-3923.00032
Popis:	We investigate how redistribution of income is affected by the fact that income is privately observed and agents may not be truthful in their reports to tax authorities. In response, the government establishes an audit mechanism with penalties. Adhering to a signaling equilibrium concept, we prove that agents resort to mixed strategies, which makes it difficult for tax authorities to identify the true types. The audit strategy has a cutoff property: All income declarations below the pivotal income are audited with a constant probability; other declarations are not audited. In spite of not necessarily being truthful, agents whose true income is below or equal to the pivotal income pay their liability and, consequently, the government is implementing the designated tax schedule for those agents. In equilibrium, penalties and tax corrections equal the audit cost. Consequently, the audit system does not contribute directly to revenues, and its role is restricted to supporting the equilibrium.
Databáze:	OpenAIRE
Externí odkaz:	https://explore.openaire.eu/search/publication?articleId=doi_________::5010e4a876d8e9a4ddf88af578eaf262 https://doi.org/10.1111/1097-3923.00032 Zobrazit plný text záznamu Plný text ve formátu PDF