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A theoretical examination of tax evasion among the self-employed

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  • Dennis BARBER III

    (Armstrong State University, Savannah, GA USA)

Abstract

Informal activities are looked upon by most governments as a loss in potential revenue. An extension of the Ramsey model is presented that includes an income tax and a parameter that allows for the evasion of part or all of those taxes. The model shows the decrease in government revenue and long term levels of consumption and capital. However, the growth rate of capital and consumption remains unaffected by informal activities. The model does not include any assumptions about how individuals will choose to spend the money they save by evading taxes.

Suggested Citation

  • Dennis BARBER III, 2016. "A theoretical examination of tax evasion among the self-employed," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(1(606), S), pages 119-128, Spring.
    • Handle: RePEc:agr:journl:v:xxiii:y:2016:i:1(606):p:119-128
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    References listed on IDEAS

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    Full references (including those not matched with items on IDEAS)

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