The dynamic effects of fiscal reforms and tax competition on tax compliance and migration

Abstract

We study the dynamic effects of fiscal reforms on migration and tax evasion in an international context with two asymmetric countries. Given an initial international distribution of honest and dishonest taxpayers, the tax system (e.g., tax rates and degrees of progressivity) and the salary in each country, individuals decide where to reside and how much time to spend working. The model allows us to study in a dynamic setting how the distribution of honest and dishonest earners is geographically affected by fiscal reforms (e.g., variations in tax rates) and auditing efforts (e.g., probability of auditing and fines) of different countries. We show that various dynamic long term scenarios can be generated. The particular convergence of the model depends crucially on the initial geographic distribution of dishonest agents. This implies that tax reforms that have been successful in reducing tax evasion in one country may produce very different results in others, if initial conditions are significantly different. Chaotic cyclical behavior may also arise if individual propensity to migrate is sufficiently high.

Quo Vadis Kepatuhan Pajak?

“…Wajib pajak menginginkan pertukaran atau tim bal balik yang setara atas apa yang mere ka bayarkan melalui ketersediaan fasilitas publik yang memadai. Keadilan distributif menjadi salah satu penentu kepatuhan wa jib pajak karena menyangkut kompensasi atas pembayaran pajak yang diterima wa jib pajak dalam bentuk kualitas pelayanan publik yang memadai (Battisti & Deakins, 2018;Eccleston & Gray, 2014;Hofmann, Gangl, Kirchler, & Stark, 2014;Lamantia & Pezzino, 2018;Shafer & Wang, 2017 (Yee, Moorthy, & Soon, 2017).…”

Migration processes and determinants: the case of the Slovak Republic

“…Finally, dyadic factors are characteristic of country pairs, and the determinant underlying this factor is generally geographic (Abel et al, 2019;Larotta Silva, 2019). The economic factors include unemployment (Harding & Neamţu, 2018;Kilic et al, 2019;Basile et al, 2019), income level (Nguyen, 2020;Laskienė et al, 2020;Slettebak, 2021), economic growth and development (Tolmacheva, 2020;Lyulyov et al, 2021;Rennó Santos et al, 2022), poverty (Kluge et al, 2019;Nowak-Lehmann et al, 2021;Diallo, 2022), the tax system (Lamantia & Pezzino, 2018;Guerreiro et al, 2020;Dai & Tian, 2021), economic freedom (Aarhus & Jakobsen, 2019;Gignarta et al, 2020;Arif et al, 2020). So, we can state that considering the main migration factors, it is evident that people leave their countries of origin to find better living conditions in foreign countries and to escape unfavourable environments.…”