Arbeitspapier

Tax evasion and self-employment in a high-tax country: evidence from Sweden

Self-employed individuals have arguably greater opportunities than wage earners to underreport their incomes. The incentives for underreporting should be especially strong in an economy with generally high taxes. This paper uses recent income and expenditure data to examine the extent of underreporting of income among self-employed individuals in Sweden. A key hypothesis is that underreporting of incomes among the self-employed would be visible in the data as “excess food consumption”, for a given level of observed income. Our results confirm the underreporting hypothesis. In particular, we estimate that households with at least one self-employed member underreport their total incomes by around 30 percent. Underreporting appears to be twice as prevalent among self-employed people with unincorporated businesses as among those with incorporated businesses.

Language
Englisch

Bibliographic citation
Series: CESifo Working Paper ; No. 1736

Classification
Wirtschaft
Consumer Economics: Empirical Analysis
Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes
Business Taxes and Subsidies including sales and value-added (VAT)
Tax Evasion and Avoidance
Subject
Steuerflucht
Selbstständige
Mikroökonomische Konsumfunktion
Schweden

Event
Geistige Schöpfung
(who)
Engström, Per
Holmlund, Bertil
Event
Veröffentlichung
(who)
Center for Economic Studies and ifo Institute (CESifo)
(where)
Munich
(when)
2006

Handle
Last update
10.03.2025, 11:41 AM CET

Data provider

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Object type

  • Arbeitspapier

Associated

  • Engström, Per
  • Holmlund, Bertil
  • Center for Economic Studies and ifo Institute (CESifo)

Time of origin

  • 2006

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