Population dynamics of tax avoidance with crowding effects

Arbeitspapier

There are two ways for taxpayers to avoid paying taxes: legally, through tax optimization and illegally, through tax evasion. The government reacts by altering the law, and by conducting audits, respectively. These phenomena are modeled as a population game, a strategic interaction between all taxpayers: the more taxpayers optimize, the lower the optimization result as a consequence of the government tightening the tax law. The more taxpayers evade, the higher the risk of detection because of the tax agencies increasing the audit probability. If the government reacts to changed optimization behavior with too large a delay, an equilibrium tax law cannot be reached. Tax codes should be updated rapidly in order to avoid a permanent change of the tax law, which is costly both for the legislator and the taxpayers facing legal uncertainty.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Passauer Diskussionspapiere - Volkswirtschaftliche Reihe ; No. V-76-17

Classification and Topics

• Classification: Wirtschaft ; Stochastic and Dynamic Games; Evolutionary Games; Repeated Games ; Tax Evasion and Avoidance ; Tax Law
• Subject: tax avoidance ; tax evasion ; population games

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Lorenz, Johannes
• Event: Veröffentlichung
• (who): Universität Passau, Wirtschaftswissenschaftliche Fakultät
• (where): Passau
• (when): 2017

Further information

• Handle: http://hdl.handle.net/10419/172445
• Last update: 10.03.2025, 11:44 AM CET