Header

UZH-Logo

Maintenance Infos

Separating small and big fish: The case of income tax evasion


Falkinger, Josef; Walther, Herbert (1991). Separating small and big fish: The case of income tax evasion. Journal of Economics, 54(1):55-67.

Abstract

This paper proposes to offer the taxpayer a choice of tax-enforcement schemes for self-selection. More specifically, the taxpayer should have the possibility of opting for the prevailing regime with a certain penalty on the evaded tax or for an alternative regime with a higher penalty on the evaded tax but a reduced tax rate. It is shown that this leads to a separation of taxpayers characterized by a relatively high degree of evasion (H-evaders) from taxpayers who evade only a relatively small amount of tax (L-evaders). Furthermore, the procedure is not self-defeating, it is effectively possible to direct the efforts of auditing towards the H-evaders. At the end of the game the L-evaders experience a welfare gain, the H-evaders are induced to reduce their evasion activities and the government can expect higher yields.

Abstract

This paper proposes to offer the taxpayer a choice of tax-enforcement schemes for self-selection. More specifically, the taxpayer should have the possibility of opting for the prevailing regime with a certain penalty on the evaded tax or for an alternative regime with a higher penalty on the evaded tax but a reduced tax rate. It is shown that this leads to a separation of taxpayers characterized by a relatively high degree of evasion (H-evaders) from taxpayers who evade only a relatively small amount of tax (L-evaders). Furthermore, the procedure is not self-defeating, it is effectively possible to direct the efforts of auditing towards the H-evaders. At the end of the game the L-evaders experience a welfare gain, the H-evaders are induced to reduce their evasion activities and the government can expect higher yields.

Statistics

Citations

2 citations in Web of Science®
3 citations in Scopus®
Google Scholar™

Altmetrics

Downloads

0 downloads since deposited on 09 Oct 2013
0 downloads since 12 months

Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Economics
Dewey Decimal Classification:330 Economics
Language:English
Date:1991
Deposited On:09 Oct 2013 12:25
Last Modified:07 Dec 2017 22:49
Publisher:Springer
ISSN:0931-8658
Publisher DOI:https://doi.org/10.1007/BF01227455
Related URLs:http://www.jstor.org/stable/41794145

Download