Scandinavian Working Papers in Economics
Working Paper Series,
Uppsala University, Department of Economics
No 2006:12: Tax Evasion and Self-Employment in a High-Tax Country: Evidence from Sweden
Per Engström () and Bertil Holmlund ()
Additional contact information
Per Engström: Department of Economics, Postal: Uppsala University, P.O. Box 513, SE-751 20 Uppsala, Sweden
Bertil Holmlund: Department of Economics, Postal: Uppsala University, P.O. Box 513, SE-751 20 Uppsala, Sweden
Abstract: Self-employed individuals have arguably greater opportunities than wage earners to underreport their incomes. The incentives for underreporting should be especially strong in an economy with generally high taxes. This paper uses recent income and expenditure data to examine the extent of underreporting of income among self-employed individuals in Sweden. A key hypothesis is that underreporting of incomes among the self-employed would be visible in the data as “excess food consumption”, for a given level of observed income. Our results confirm the underreporting hypothesis. In particular, we estimate that households with at least one self-employed member underreport their total incomes by around 30 percent. Under-reporting appears to be twice as prevalent among self-employed people with unincorporated businesses as among those with incorporated businesses.
Keywords: Tax evasion; self-employment; Engel curves
16 pages, May 17, 2006
Full text files
FULLTEXT01.pdf
- Fortchoming as
- Per Engström and Bertil Holmlund, 'Tax Evasion and Self-Employment in a High-Tax Country: Evidence from Sweden', Applied Economics
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