Arbeitspapier
Income Tax Buyouts and Income Tax Evasion
A tax buyout is a contract between tax authorities and a tax payer which reduces the marginal income tax rate in exchange for a lump-sum payment. While previous contributions have focussed on labour supply, we consider the interaction with tax evasion and show that a buyout can increase expected tax revenues. This will be the case if (1) the audit probability is constant and the penalty for evasion is a function of undeclared income or (2) the penalty depends on the amount of taxes evaded, and authorities use information about income generated by the decision about a tax buyout offer when setting audit probabilities. Since individuals will only utilise a tax buyout if they are better off, higher tax revenues imply that such contracts can be Pareto-improving.
- Language
-
Englisch
- Bibliographic citation
-
Series: CESifo Working Paper ; No. 4613
- Classification
-
Wirtschaft
Asymmetric and Private Information; Mechanism Design
Taxation and Subsidies: Efficiency; Optimal Taxation
Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes
Tax Evasion and Avoidance
- Subject
-
asymmetric information
revenues
self-selection
tax buyouts
tax evasion
- Event
-
Geistige Schöpfung
- (who)
-
Goerke, Laszlo
- Event
-
Veröffentlichung
- (who)
-
Center for Economic Studies and ifo Institute (CESifo)
- (where)
-
Munich
- (when)
-
2014
- Handle
- Last update
-
11.03.2025, 7:35 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
- Goerke, Laszlo
- Center for Economic Studies and ifo Institute (CESifo)
Time of origin
- 2014
Other Objects (12)
Income tax buyouts and income tax evasion
Tax Progressivity and Tax Evasion
Tax overpayments, tax evasion, and book-tax differences
Corporate and personal income tax declarations
Corporate and personal income tax declarations
Tax evasion by firms
Tax evasion by individuals
Relative consumption and tax evasion
Relative consumption and tax evasion
Tax Evasion in a Unionised Economy
Human capital formation and tax evasion
Bureaucratic corruption and profit tax evasion
Income tax buyouts and income tax evasion
Tax Progressivity and Tax Evasion
Tax overpayments, tax evasion, and book-tax differences
Corporate and personal income tax declarations
Corporate and personal income tax declarations
Tax evasion by firms
Tax evasion by individuals
Relative consumption and tax evasion
Relative consumption and tax evasion
Tax Evasion in a Unionised Economy
Human capital formation and tax evasion
Bureaucratic corruption and profit tax evasion
Income tax buyouts and income tax evasion
Tax Progressivity and Tax Evasion
Tax overpayments, tax evasion, and book-tax differences
Corporate and personal income tax declarations
Corporate and personal income tax declarations
Tax evasion by firms
Tax evasion by individuals
Relative consumption and tax evasion
Relative consumption and tax evasion
Tax Evasion in a Unionised Economy
Human capital formation and tax evasion