Discussion Paper Series in Economics, Department of Economics, Norwegian School of Economics (NHH)
Fair tax evasion.
(), Alexander W. Cappelen
() and Tone Ognedal
Abstract: In this paper we analyse how fairness considerations, in
particular considerations of just income distribution, affect whether or
not people find tax evasion justifiable and their willingness to evade
taxes. Using data from the Norwegian “Hidden Labour Market Survey” we show
that individuals with low hourly wages and long working hours have a higher
probability of justifying tax evasion. These are individuals that arguably
are treated unfairly in a tax system that taxes an individual’s total
income without taking into account how many hours the individual has
worked. The same individuals are also more willing and likely to take home
income without reporting it to the tax authorities. The results are
consistent with a model in which individuals make a trade-off between
economic gains and fairness considerations when they make decisions about
tax evasion. Taken together our results suggest that considerations of fair
income distribution are important for the analysis of tax evasion.
Keywords: Tax evasion; redistributive taxation; fair income distribution.; (follow links to similar papers)
JEL-Codes: D63; H26; (follow links to similar papers)
20 pages, April 30, 2013
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