A robust prediction from the tax evasion literature is that optimal auditing induces a regressive bias in e¤ective tax rates compared to statutory rates. If correct, this will have important distributional consequences. Nevertheless, the regressive bias hypothesis has never been tested...

Recently, attempts have been made to formalize the assumptions of the ‘slippery slope’ framework about the effects of trust (in) and power (of) tax authorities on tax compliance. In this sense, the proposed theoretical work introduces the basic insights of the ‘slippery slope’ framework...

The enforcement of compliance with tax regulation is a complex task. This is particularly the case when the administrative capacity of the tax authority is low, as it often happens in developing and transition countries. This paper draws on some international experiences in fighting tax evasion...

Taxpayers with large amounts of non-third-party-reported income usually self-report at least a portion of it, an act inconsistent with common theories of compliance. I explain this behavior by generalizing the classical evasion theory to realistically account for the endogeneity of audit and...

In this paper we focus on the effects of investigations on tax compliance. Results from empirical studies suggest that the effects of audits are not only in terms of recovered unpaid tax (direct effects), but there are also indirect effects in terms of future better compliance in the rest of the...

We contribute to the debate on how to assess the size of the underground or shadow economy with a reinterpretation of the traditional Currency Demand Approach (CDA) � la Tanzi. We introduce three main innovations. First, we take as dependent variable in the money demand equation a direct...

This study investigates the hypothesis that higher federal budget deficits act to increase the degree of federal personal income tax evasion in the U.S. Using annual data on aggregate personal income tax evasion for the period 1961-1997, 1997 being the most recent year for which all of the...

Unaccounted for currency in the U.S. is argued to reflect the presence of widespread income tax evasion. This empirical study seeks to identify determinants of the underground economy in the U.S. in the form of federal personal income tax evasion over the period 1970-2008. In this study, we use...

This paper examines the main determinants of firms tax evasion and corruption in the formal industrial sector. In our model psychological morale of bureaucratic agents are important to explain corruption.It is shown that the presence of rents linked to favoritism and patronage practices is...

We develop a moral hazard model with auditing where both the principal and the agent can influence the probability that the true state of nature is verified. This setting is widely applicable for situations where fraudulent reporting with costly state verification takes place. However, we use...