This paper investigates whether tax evasion can be beneficial for an optimal income tax schedule. Past theoretical discussions have presented mixed outcomes as to whether allowing taxpayers to opt into uncertainty could indeed enhance overall tax revenues. In this study, we conducted an original...

This paper examines the implications of a “tax evasion effect” when revenues from an environmental tax are used to reduce other taxes. Tax evasion is modeled as a costly and unproductive firm activity. When the tax base is shifted in a revenue-neutral manner toward environmental taxes, the...

This paper begins by contrasting the caricatures "homo and femina economicus" with "homo and femina realitus". Against this backdrop, the paper considers three "apparently falsified" empirical predictions of the standard expected utility model of individual decision-making concerning...

A strictly risk-averse individual with an exogenous gross income in period one can acquire human capital in the same period and evade taxes. Period-two income rises with educational investments in period one and can also be hidden from tax authorities. It is shown that a greater tax...

This paper extends the standard theoretical model of tax enforcement by allowing for the cross- matching of transactions in addition to the auditing of taxpayers. For the Value Added Tax (VAT) the matching of purchase and sales invoices is an important enforcement technique. The paper examines...

Tax authorities worldwide are implementing voluntary disclosure schemes to recover tax on offshore investments. Such schemes are typically designed retrospectively following the bulk acquisition of information on offshore holdings, such as the recent “Paradise” and “Panama” papers. They...

This paper analyzes the relationship between cash and tax evasion by studying the effects of two measures to fight evasion: accessing taxpayers’ banking data to check the consistency with reported income and discouraging the use of cash with thresholds on payments. We show that variation in...

Recent literature on tax evasion emphasizes the importance of moral considerations to explain compliance behavior. As a consequence scholars aim to identify factors that shape this so-called tax morale. However, the causal link between tax morale and actual compliance behavior is not established...