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Gamannossi degl'Innocenti, D. and Rablen, M.D. orcid.org/0000-0002-3521-096X (2017) Income tax avoidance and evasion: A narrow bracketing approach. Public Finance Review, 45 (6). pp. 815-837. ISSN 1552-7530
Abstract
We characterize optimal individual tax evasion and avoidance when taxpayers “narrow bracket” the joint avoidance/evasion decision by exhausting all gainful methods for legal avoidance before choosing whether or not also to evade illegally. We find that (1) evasion is an increasing function of the audit probability when the latter is low enough, yet tax avoidance is always decreasing in the probability of audit; (2) an analogous finding to the so-called Yitzhaki puzzle for evasion also holds for tax avoidance—an increase in the tax rate decreases the level of avoided income and the level of avoided tax; and (3) that, holding constant the expected return to evasion, it is not always the case that the combined loss of reported income due to avoidance and evasion can be stemmed by increasing the fine rate and decreasing the audit probability.
Metadata
Item Type: | Article |
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Authors/Creators: |
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Copyright, Publisher and Additional Information: | © The Author(s) 2016. This is an author produced version of a paper subsequently published in Public Finance Review. Uploaded in accordance with the publisher's self-archiving policy. |
Keywords: | Tax avoidance; Tax evasion; Narrow bracketing; Financial intermediaries |
Dates: |
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Institution: | The University of Sheffield |
Academic Units: | The University of Sheffield > Faculty of Social Sciences (Sheffield) > Department of Economics (Sheffield) |
Depositing User: | Symplectic Sheffield |
Date Deposited: | 22 Nov 2016 10:31 |
Last Modified: | 29 Jan 2018 18:21 |
Published Version: | https://doi.org/10.1177/1091142116676362 |
Status: | Published |
Publisher: | SAGE Publications |
Refereed: | Yes |
Identification Number: | 10.1177/1091142116676362 |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:106502 |
Available Versions of this Item
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Income Tax Avoidance and Evasion: A Narrow Bracketing Approach. (deposited 19 Sep 2016 14:08)
- Income tax avoidance and evasion: A narrow bracketing approach. (deposited 22 Nov 2016 10:31) [Currently Displayed]