Richter, Wolfram F.; Boadway, Robin W. - 2001
Tax evasion is modeled as a risky activity and integrated into a standard problem of optimal tax design. It is shown … that there is a trade off between reducing tax evasion and reducing tax distortion. Thus it is efficient to supplement a … broad-based wage tax by a tax on specific consumption if the former is evaded and the latter not. The optimal tax structure …