Tax evasion and work in the underground sector

Frederiksen, Anders; Graversen, Ebbe Krogh; Smith, Nina

doi:10.1016/j.labeco.2004.02.011

Cited by 17 publications

(8 citation statements)

References 11 publications

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“…x is the total consumption quantity of the goods market, and i e is the probability of the sales vendor's tax evasion being discovered by tax personnel. If Frederiksen et al (2005) only considered the fines required when underground income has been discovered. However, most situations still require making up the tax (e.g., still required to pay housing tax and rent income).…”

Section: Discussionmentioning

confidence: 99%

The Underground Economy and Tax Base Erosion

Wang¹

2013

ASS

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The tax evasion behaviors of above-ground and underground economic activities differ. Above-ground economy tax evasion refers to people engaging in government sanctioned production and consumer activities and circumventing the payment of taxes mandated by law. The underground economy refers to people engaging in economic activities that are not sanctioned by the government, which is also known as the "grey economy." The main objective of engaging in underground economic activity is to avoid taxation by tax agencies. To explore the relationship between taxpayers' underground economic income reporting and tax compliance rates, this study established a utility function that included both the above-ground and underground economies, and divided public goods based on their above-ground and underground economic weight. This study analyzed taxpayers' underground economic income by adopting the probability of penalization and identifying the optimal participation rate. This study also found that taxpayers' corresponding risk aversion attitudes after becoming wealthy, or experiencing increased income, was a key factor of whether increases in the tax rate generated increases in the ratio of the underground economy labor force.

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Section: Discussionmentioning

confidence: 99%

The Underground Economy and Tax Base Erosion

Wang¹

2013

ASS

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“…Theoretical studies (e.g., Cowell, 1985), have characterised taxation and legal constraints as factors increasing the risk of income concealment through undeclared work. Many empirical studies explicitly model these behaviours using structural models and taking into account taxation or charges on formal work (Lacroix & Fortin, 1992;Frederiksen et al, 2005;Fortin et al, 2004;Lemieux et al, 1994). Others use natural experiments using variations in the level of taxation, for example between regions (Brülhart & Parchet, 2014).…”

Section: Undeclared Work In the Literaturementioning

confidence: 99%

Redistributive Effects of the Taxation of Couples and Families: A Microsimulation Study of Income Tax

André¹,

Sireyjol²

2021

Ecostat

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In France, married couples or couples in civil partnerships must declare their resources jointly and are allocated two tax units. This tax system, referred to as the marital quotient, represents a financial package of around 10 billion euros. Using the Ines microsimulation model, we simulate three reforms of this system: an individualisation of taxation, a reduction of marital quotient to 1.5 tax units while allowing married couples/couples in civil partnerships to opt for individual taxation and, finally, the capping of the marital quotient at the same level as the family quotient. Individualisation results in the highest tax gain (around 7 billion), compared with 3.8 billion when the marital quotient is reduced to 1.5 tax units and 3 billion with the marital quotient cap. With these reforms, 46%, 45% and 7% of couples lose out, respectively. The median losses correspond to 1.5%, 1.3% and 2.6% of the disposable income of the households concerned, respectively. Finally, 60%, 64% and 83% of the losses are in the last three standard of living deciles, respectively.

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“…The bigger the difference between the total cost of spending your time in productive activities in the official economy and your after‐tax earnings, the greater is the incentive to go underground in the shadow economy (Johnson, Kaufmann, & Zoido‐Lobatón, , ; Schneider, , )—note that this result does not even take into account the enforcement issue: higher taxes induce this kind of behaviour even if a “big brother” is in place. Frederiksen, Graversen, and Smith () claim that the distortions of labour supply decisions are related to the opportunities arising by particular occupations and/or sectors of the economy where one can tax evade, though this is not an easy task to prove empirically (Parker, ).…”

Section: Related Literaturementioning

confidence: 99%

“Regulate me not”: The regulatory failures of taxation: A tale from Greece

Kottaridi

Thomakos

2018

Manage Decis Econ

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This paper is a critical review of the problems of the Greek tax system. A well‐structured tax system promotes allocative efficiency and supports economic growth, whereas on the contrary current Greek reality translates to nontransparency, complexity, and tax corruption: all of them constitute regulatory failure. Using data, which refer to detailed tax information on certain years, starting in 2006 and ending in 2011, and data on the total back taxes owed to the Greek state, we highlight both the problems but more importantly the need to restructure the Greek tax system to finally promote economic growth and not crony capitalism.

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Tax evasion and work in the underground sector

Cited by 17 publications

References 11 publications

The Underground Economy and Tax Base Erosion

The Underground Economy and Tax Base Erosion

Redistributive Effects of the Taxation of Couples and Families: A Microsimulation Study of Income Tax

“Regulate me not”: The regulatory failures of taxation: A tale from Greece

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