Arbeitspapier
What Explains Tax Evasion? An Empirical Assessment based on European Data
This study computes estimates of tax compliance in selected European countries for value added tax, excise tax, personal income tax and social security contributions, using national accounts data together with data on official tax structures and revenues. These estimates are then analysed to explain the differences in compliance rates across European countries and across time. In accordance with the classical models of Allingham-Sandmo and their successors, we find that tax evasion is positively correlated with the tax rate itself. However, we also find support for Bloomquist's hypothesis that higher income inequality leads to higher tax evasion. We also find that the quality of the judicial system plays a role in explaining VAT evasion, confirming general hypotheses on the main drivers of the shadow economy. Finally, we find that our chosen measure of tax complexity is positively correlated with tax compliance for personal income tax, leading us to doubt the soundness of 'flat tax' reforms in transition countries, at least with respect to their impact on compliance.
- Language
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Englisch
- Bibliographic citation
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Series: wiiw Working Paper ; No. 40
- Classification
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Wirtschaft
Data Collection and Data Estimation Methodology; Computer Programs: General
Tax Evasion and Avoidance
Fiscal Policies and Behavior of Economic Agents: General
- Subject
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taxation
tax compliance
tax evasion
income inequality
tax complexity
flat tax
transition economies
- Event
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Geistige Schöpfung
- (who)
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Christie, Edward
Holzner, Mario
- Event
-
Veröffentlichung
- (who)
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The Vienna Institute for International Economic Studies (wiiw)
- (where)
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Vienna
- (when)
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2006
- Handle
- Last update
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10.03.2025, 11:44 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Christie, Edward
- Holzner, Mario
- The Vienna Institute for International Economic Studies (wiiw)
Time of origin
- 2006
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