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.
- Sprache
-
Englisch
- Erschienen in
-
Series: IAAEU Discussion Paper Series in Economics ; No. 01/2014
- Klassifikation
-
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
- Thema
-
Asymmetric information
Revenues
Self-selection
Tax buyouts
Tax evasion
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Goerke, Laszlo
- Ereignis
-
Veröffentlichung
- (wer)
-
University of Trier, Institute for Labour Law and Industrial Relations in the European Union (IAAEU)
- (wo)
-
Trier
- (wann)
-
2014
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:44 MEZ
Datenpartner
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Objekttyp
- Arbeitspapier
Beteiligte
- Goerke, Laszlo
- University of Trier, Institute for Labour Law and Industrial Relations in the European Union (IAAEU)
Entstanden
- 2014
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