Seminar Papers,
Stockholm University, Institute for International Economic Studies

Abstract: I study the dynamic tax evasion program of a household with many sources of income. Contrary to the previous literature, I assume that the detection risk of tax evasion is uncorrelated across these sources. If detection triggers the repayment of currently and previously evaded taxes, the marginal cost of evasion increases over time and the optimal duration of evasion is positive but finite. With stochastic pre-tax income, the fraction of aggregate taxes evaded remains interior, even if detection triggers duration-independent penalties. The model helps to understand the recent European debate about the cross-border exchange of information about capital income as opposed to taxation at the source. It yields a transparent representation of the revenue and efficiency losses due to tax evasion and highlights various effects of tax policy on evasion.

Keywords: Tax evasion; hysteresis; inaction range; optimal taxation; information exchange

JEL-codes: E60; H20

29 pages, July 8, 2003

Full text files

FULLTEXT01  

Download statistics

Published as

Dirk Niepelt, (2005), 'Timing Tax Evasion', Journal of Public Economics, vol 89, no 9-10, pages 1611-1637

• Stockholm University, Institute for International Economic Studies
• Ordering Working Papers
• Home page for this series

Questions (including download problems) about the papers in this series should be directed to Hanna Christiansson ()
Report other problems with accessing this service to Sune Karlsson ().

RePEc:hhs:iiessp:0721This page generated on 2024-09-13 22:15:25.