Inflation and Tax Evasion: An Empirical Analysis

Crane, Steven E; Nourzad, Farrokh

doi:10.2307/1925500

Cited by 93 publications

(50 citation statements)

References 11 publications

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“…17-27) survey the available estimates of tax evasion in large samples of countries. The determinants of tax evasion behavior appear to be roughly consistent across available time series studies (Crane and Nourzad (1986) and Poterba (1987)) and cross-sectional studies (Clotfelter (1983), Slemrod (1985), Witte and Woodbury (1985), Dubin and Wilde (1988), and Feinstein (1991)), and conforms to tax collection patterns in the panel analyzed by Dubin et al (1990). In the only available study of taxpayer behavior in consecutive years, Erard (1992) finds that taxpayers who are audited in one year are more likely than others to be caught evading in the subsequent year.…”

Section: Datasupporting

confidence: 71%

“…16 Value function iterations show that Φ is single valued under weaker conditions than those that follow. Hence Propositions 2.5 and 2.6 hold more generally than the following inequality suggests.…”

Section: Proposition 25 Under the Assumptions Of The Preceding Propomentioning

confidence: 99%

“…Taking e t−n x a t−i to be sufficiently small (compared to e t + n−1 i=1 e t−i x a t−i ) to make a first-order Taylor expansion a valid approximation to the value of the second term of (15), Table 1 presents estimates of alternative specifications of (14) that incorporate the approximation given by (16) and correspond to differing values of n. As expected, the probability of audit has a positive and significant effect on audit-related penalties and fines, though the estimated coefficient lies between 0.32 and 0.39, well below the unit value predicted by (14). Multiple lags of e appear to influence current audit-related penalties, as indicated for example in column 3 by the coefficient of 1.070 on the sum of current evasion plus two of its lags.…”

Section: Retrospective Enforcementmentioning

confidence: 99%

See 2 more Smart Citations

Understanding Tax Evasion Dynamics

Engel¹,

Hines²

1999

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The U.S. tax system relies on a form of voluntary compliance. Under U.S. law, taxpayers are required to assist tax authorities by reporting their incomes honestly and paying taxes based on their reported incomes. The system is actively enforced by the Internal Revenue Service (IRS) and the courts, who can impose substantial penalties for noncompliance. Nevertheless, tax evasion is a major concern in the United States, and even more so in other countries. 2 Individuals underreport approximately 10.6% of their incomes annually in the United States, and the IRS estimates that tax evasion reduces U.S. tax collections by $190 billion annually (Herman, 1998). Little is understood about the factors that determine how much income individuals report to the government and, of particular interest to policymakers, about the way in which aggregate compliance responds to changes in the economic and policy environment. This paper analyzes a feature of tax enforcement that encourages a particular dynamic tax evasion pattern in the United States. The IRS is careful not to disclose its audit policies, but there is some consensus within the taxpaying public about various aspects of its practices. Tax returns are selected for examination in an initial pass, and if not chosen within a period of about a year, a return is very unlikely to be examined later unless some unusual event draws the IRS's attention to it. U.S. law provides statutes of limitations -three years for minor tax evasions and six years for major tax evasions. The determinants of whether a return will be audited are not known with certainty, but the audit probability is widely believed to be a function of the extent to which a taxpayer underreports income in the current year. Under these circumstances, a taxpayer who evades much of his tax liability in one year has an incentive to report honestly in the following year, since, if he is subsequently audited and caught evading, he is at greater risk of incurring substantial penalties for past evasions.Section 2 of the paper formalizes this notion by introducing a model of tax evasion in which taxpayers who were not audited during the previous year are conscious of their potential liabilities for undiscovered past evasions. As a general matter, these taxpayers are likely to evade less this year if last year's evasion level was particularly high, and conversely, to evade more than usual following a year of little evasion. These general tendencies are tempered somewhat by the dynamic nature of any taxpayer's compliance problem. Higher-than-normal evasion in a year following little 2 The paper uses the term "evasion" to include not only fraudulent evasion but also other forms of willful income underreporting for tax purposes that may differ legally from evasion. See also footnote 10.

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Section: Datasupporting

confidence: 71%

Section: Proposition 25 Under the Assumptions Of The Preceding Propomentioning

confidence: 99%

Section: Retrospective Enforcementmentioning

confidence: 99%

See 1 more Smart Citation

Understanding Tax Evasion Dynamics

Engel¹,

Hines²

1999

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“…Este hecho es consistente con la mayoría de las reflexiones en la literatura sobre el tema, en la que se asegura que es poca la evidencia en cuanto a que los castigos severos reducen el incumplimiento de las obligaciones fiscales (Doob y Webster, 2003 Tercero, las tasas de cumplimiento descienden cuando aumenta la tasa tributaria. El resultado refuta los hallazgos teóricos del modelo de Shlomo Yitzhaki (1974), pero es consistente con diversos estudios empíricos que apoyan la idea de que el ahorro en impuestos derivado del incumplimiento de las obligaciones fiscales es una función de la tasa tributaria (Clotfelter, 1983;Slemrod, 1985;Crane y Nourzad, 1986;Bladry, 1987;Poterba, 1987, y Friedland, Maital y Rutenberg, 1978. En consecuencia, los incentivos para el incumplimiento aumentan en la medida en que se eleva la tasa tributaria.…”

Section: Resultsunclassified

Efecto del género en el cumplimiento del pago de impuestos

Sour

2015

EDU

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Gender Tax Compliance in MexicoUsing experimental evidence, we examine the effect of gender on tax compliance-an often ignored factor in assessing tax incidence due to the difficulties in measuring its effects. The empirical findings suggest that tax compliance is higher for women than for men, controlling for economic and demographic variables. The results highlight the necessity to take into account gender when designing fiscal policy recommendations, especially those affecting the working women.

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“…As added by Dalu et al (2012) "a country facing an increasing amount of tax evasion and tax avoidance is likely to exhibit a low productive investment mix, this would mean low economic growth and the public run enterprises would be negatively affected." Secondly, Fishburn (1981) and Nourzad (1986) found that the inflation has a positive relationship with the tax evasion as they came to a point that the real value of the income of individual would decline by the influence of the inflation. However, if the individual decided not to pay the tax then he would eventually save his money and his purchasing power for the coming times.…”

Section: The Impact Of Tax Evasionmentioning

confidence: 99%

Tax evasion: Empirical evidence from sub-Saharan Africa

Aumeerun¹,

Jugurnath²,

Soondrum³

2016

J. Account. Taxation

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Tax is the income which is paid to the government in order to fulfill the need of the public. However tax evasion is the act of not paying the tax by use of illegal ways. Allingham and Sandmo being the first researchers studying the tax evasion found a relationship of tax evasion with low penalty fees and a low detection. The tax evasion basically is affected by various factors but it also affects many economic factors. Sub Saharan Africa being a developing region is facing the phenomenon of tax evasion in a crucial way. This study measures the impact of the tax evasion on the Gross Domestic Product (GDP) per capita of Sub Saharan Africa. The relationship between the GDP per capita and tax evasion is tested using the generalized least squared whereby it is found that there is a positive impact of tax evasion on the GDP per capita however the p-value states that the tax evasion is insignificant and is not an important component for the determination of the GDP per capita. Moreover in the presence of tax evasion, this study shows that GDP per capita has also a negative relationship with the Foreign Direct Investment (FDI), positive relationship the Gross Domestic Fixed Capital Formation (GDFCF), a favorable connection with the export, a negative relationship with the import, a positive impact on the inflation and a negative relationship with the government expenditure. To fight against tax evasion for the economic benefit of Sub Saharan Africa, it is advised to review the tax system, to implement strict and severe penalties and very high fines for tax evaders. Moreover, the tax authorities of Sub Saharan Africa need to appoint more experts in auditing department to be able to detect the non-compliance tax payers easily and rapidly

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Inflation and Tax Evasion: An Empirical Analysis

Cited by 93 publications

References 11 publications

Understanding Tax Evasion Dynamics

Understanding Tax Evasion Dynamics

Efecto del género en el cumplimiento del pago de impuestos

Tax evasion: Empirical evidence from sub-Saharan Africa

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