RICHTER, WOLFRAM F.; BOADWAY, ROBIN W. - In: Journal of Public Economic Theory 7 (2005) 3, pp. 361-381
Income tax evasion is modeled as a risky activity and integrated into a standard optimal tax problem in which there is a good whose sales are observable. If the penalty for evasion is proportional to the tax evaded (the Yitzhaki scheme), the optimal tax structure is unaffected by evasion. If the...