Tax Factors of Sustainable Development: System Dynamics Approach towards Tax Evasion Analyses

Dynamic Process Models for the Evaluation of the Compliance Level Evolution: Evidence from Italy

“…This approach is widely used for macroeconomic analysis, see for instance [9][10][11], but less bibliography is available for microeconomic analysis, where the most part of the literature relies on agent-based models. In the work of [12], a system dynamic model, to simulate the taxpayer-government interaction based on expected utility maximization, is proposed as well as results of its application, but without a theoretical analysis of the dynamic model (existence, uniqueness, and stability of the equilibrium). Computations confirmed that with relatively low penalties and middle level of inspection, opportunistic behaviour is more effective for taxpayers and this leads to substantial losses for the government.…”

“…So, focusing on the rewarding part of the SIR methodology and exploiting the properties of this simple model, that is, avoiding to consider risky behaviour linked to the probability of being audited (the taxpayers evaluate only potential rewarding values), having an almost perfect knowledge of the attribute values of their systematic utility for each of the alternatives, to the best of the author's knowledge, see for example [2,10,12] or the work of [32] where a dynamic game model based on a Logit RUM quantal response has been developed and analysed, the proposed model is a first attempt to use a combination of random utility models and dynamic system models for the analysis of compliance temporal dynamics.…”