Why pay taxes when no one else does?

Arbeitspapier

In this paper we try to understand the phenomena whereby a large proportion of the population evades tax payments. We present a model which incorporates elements from the theory of information cascades with the standard model of tax evasion and analyze the connection between the decision of a potential tax evader, the number of tax evaders and the number caught in previous periods. General conditions exist under which any expected utility maximizing tax evaders will decide to emulate other tax evaders.

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• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 4153

Classification and Topics

• Classification: Wirtschaft ; Tax Evasion and Avoidance ; Fiscal Policies and Behavior of Economic Agents: Household ; Asymmetric and Private Information; Mechanism Design
• Subject: Tax evasion ; uncertainty ; information cascades ; Steuervermeidung ; Steuerkriminalität ; Entscheidung bei Unsicherheit ; Erwartungsnutzen ; Herdenverhalten ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Epstein, Gil S. ; Gang, Ira N.
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2009

Further information

• Handle: http://hdl.handle.net/10419/35549
• URN: urn:nbn:de:101:1-20090513515