Taxpayers' Attitudes Toward Risk and Amnesty Participation: Economic Analysis and Evidence for the Italian Case

Marchese, Carla; Privileggi, Fabio

doi:10.2139/ssrn.177590

Cited by 13 publications

(34 citation statements)

References 13 publications

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“…Calculated lower threshold tax evasion and upper threshold risk aversion parallel previous findings in Marchese and Privileggi (1997) with a somehow larger downward correction for risk aversion and upward correction for tax evasion than for the 1991 tax amnesty.…”

Section: Estimation On Data Pertaining To the 1991 And 1994 Italian Tsupporting

confidence: 84%

“…When taxes are considered instead, the amount of the law breach (tax evasion), is a continuous variable, while risk attitudes (which arguably vary depending on income) contribute to motivating both the amount of the law breach and the willingness to accept a settlement proposal. Self-selection of the guilty of large tax evasion through FATOTA or tax amnesties is thus quite likely to work, as happens in examples appeared in ), Franzoni (2000, and Marchese and Privileggi (1997). However, the present paper shows that the case of an imperfect self-selection cannot be ruled out in general.…”

Section: Discussionmentioning

confidence: 53%

“…22 The upper risk aversion threshold is not far from that calculated in Marchese and Privileggi (1997), which ranged from 4.6 to 6.3. 23 The lower threshold percentage tax evasion in the examples examined is always comprised between 34 and 35% of the true income [to be compared with 33 and 34% calculated in Marchese and Privileggi (1997)]. The upper threshold percentage tax evasion is 73-75%, thus suggesting that only quasi-full evaders were left out by the amnesty.…”

Section: Estimation On Data Pertaining To the 1991 And 1994 Italian Tmentioning

confidence: 88%

“…We depart from a previous research carried over by Marchese and Privileggi (1997), where a Constant Absolute Risk Aversion (CARA) utility function was used, by assuming that all taxpayers are characterized by a Constant Relative Risk Aversion (CRRA) utility function. Heterogeneity among taxpayers is assumed.…”

Section: Introductionmentioning

confidence: 99%

“…It accords also with conjectures and examples put forth in the literature about plea bargaining (see, e.g., Grossman and Katz, 1983). However, the modelling of possible self-selection failures of FATOTA or tax amnesties has not been considered in previous literature (see for example Franzoni, 2000;Glen Ueng and Yang, 2001;Marchese and Privileggi, 1997) and does not represent a trivial extension from the plea bargaining literature.…”

Section: Introductionmentioning

confidence: 99%

See 4 more Smart Citations

Tax Amnesties and the Self-Selection of Risk-Averse Taxpayers

Marchese

Privileggi

2004

Eur J Law Econ

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In this paper we model taxpayers participation in an unexpected tax amnesty, which can be entered by paying a fixed amount. Taxpayers are characterized by a Constant Relative Risk Aversion (CRRA) utility function and differ in relative risk aversion coefficient and in income. We show that amnesties may fail as a self-selective device to fully separate big from small evaders and to extract resources from the former. Only taxpayers whose relative risk aversion falls within a given interval participate, while those whose evasion is too small or too large do not enter. The model is used to estimate relative risk aversion and tax evasion of participants in 1991 and 1994 Italian income tax amnesties.

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Section: Estimation On Data Pertaining To the 1991 And 1994 Italian Tsupporting

confidence: 84%

Section: Discussionmentioning

confidence: 53%